I have finally had an opportunity to work with one of my favorite partners, Baird’s CMC, for a very cool project called The Conversation Behind Closed Doors — Inside the Boardroom: How Corporate America Really Views Africa. Here’s an audio interview I did last week of Francois Baird about the project.
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“An inside-the-boardroom survey of attitudes toward corporate investment in Africa among leading U.S. corporations. The information was gathered between January and November 2008 in a series of closed door interviews with senior officers of 30 American Fortune 100 corporations by senior associates of Baird’s CMC.”
Here’s the link to the Social Media News Release (SMNR) and the full executive summary in HTML and PDF as well as an interview I recorded last week with Francois Baird at the US office of Baird’s CMC in DC.
Here’s some more details from the SMNR:
Why has Africa not attracted more interest from the U.S. business community?
- Rule of law — The rule of law does not prevail to the degree required to make Africa an attractive investment destination. This applies to corporate, societal, and criminal law
- Attraction — While the enormous natural resources are an attraction, Africa does not offer a sufficiently large middle class of consumers or show consistent economic growth that could promise a future market. Most African countries are small and have poor markets, and there are barriers to regional markets–such as taxes and the freedom of movement of people and goods
- Risks versus rewards– Given the currently perceived risks in Africa, the rewards have to be very high to make it worthwhile to invest. Presently, U.S. corporations say that there are very few visible promises of future returns high enough to justify significant interest in investing
- Supportive business framework–Transportation and communications infrastructure, trained or trainable human resources, and equitable trade and employment practices are insufficient to support corporate investment
- A welcoming environment– African countries are not doing a sufficient job of providing education and health services to the potential workforce, which makes the potential hire-able local insufficient to support investment.
This is a report on part one of a study in two parts about investment in Africa
Part One: Understand how US corporations view Africa as an investment destination and what their requirements are for investing in Africa on the same scale as their investments in the rest of the developing world.
News Facts
- Africa is the world’s second largest and second most populous continent after Asia, covering 20% of the world’s total land area, and home to 14% of the world’s human population, yet Africa remains the world’s poorest and most underdeveloped continent
- Africa has not received its “fair share” of global Foreign Direct Investment (FDI) flows
- Since the early 1980s, Foreign Direct Investment (FDI) flows to Africa averaging only 2.2% of the global total, while Asia received no less than 17.3% of the total
- Corporate America is interested and watching Africa closely; they see pockets of great potential
- US Technology companies are most attracted to investing in Africa
- Overall, the business case for investing in Africa is less compelling than for its competitors
- To make itself more attractive for US investment, Africa should:
- Invest in education , health and infrastructure
- Ensure the rule of law and a business-friendly climate for all investing companies
- Show it is serious about attracting foreign investment
- Market itself as aggressively as other regions of the world
- Demonstrate opportunity cost of not investing
- USA Inc. is more interested in Africa than before, because the African market appears increasingly attractive, but Africa has tough competition and high hurdles for US investment. Education is at the top of the US corporate wish list for Africa; “educate your people so that we can employ them.”
- The African countries that hold most interest are South Africa and some countries in the North, like Egypt; there are also some pockets of interest in West Africa, most notably Ghana, Nigeria and to some extent Angola; while some in the South (Botswana and Mozambique) and East (Uganda and Kenya), are also being watched.
