Africa is a continent of 54 countries, each with its own risks and opportunities and one of the biggest myths about doing business there is to generalize about them, says Jay Ireland, CEO of General Electric in Africa.
Ireland attended a session Thursday on mythbusting the risks of investing in Africa at the World Economic Forum on Africa in Cape Town, according to an article in Business Day Live.
Some African countries are dogged with corruption and some aren’t. An investor must evaluate whether to do business based on risk and reward in the same way one would in any other country, Ireland said.
Doing business in Africa is not as risky as people think, he said, but it does require being there and seeing for themselves.
Foreigners mistakenly see Africa as provinces, and when there’s trouble in one, they stop visiting another, Ugandan Prime Minister Amama Mbabazi said in the Business Day Live article. “When there is trouble in the Congo, tourists stop coming to Uganda as if it is a province,” he said. Most African countries have moved past “governance problems” or are making efforts at reform, he said.
The desire by each of the continent’s countries to be sovereign states creates something of a strategic bottleneck, Mbabazi said in the article. Individually, their markets are small, which poses problems for investors, he said. However, there are initiatives towards “regional integration,” Mbabazi said.
Africa’s very young population and resources will help it move forward, he said.
Investor perceptions of Africa are changing along with its emerging growth potential, according to Elizabeth Littlefield, president of the U.S.-based Overseas Private Investment Corporation.
She said in the Business Day Live article that the middle class with disposable income and a hunger for consumer goods would grow by 50 percent in the next 10 years. With 60 percent of the world’s uncultivated land, Africa also had “vast untapped potential for agriculture,” she said.
According to World Bank’s survey on the ease of doing business, African countries were showing the biggest improvements, Littlefield said in the article. This was significant for investors who are interested in progress.
An “incredibly powerful signal” for investors, Littlefield said, was “the reversal of the brain drain from the continent.”
It’s easier to market a country than a continent of 54 countries, said Carlos Lopes, executive secretary for the United Nations Economic Commission for Africa in the article.
By 2040, Lopes said Africa would have the largest workforce in the world and it would look very different than it does now — more urbanised, more connected and more educated.