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Posted on Sustainabilitank.info on May 26th, 2009
by Pincas Jawetz (pj@sustainabilitank.info)

The US Chamber of Commerce has commissioned from Baird’s Communications Management Consultants (Baird’s CMC) in partnership with the Africa Business Initiative, 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.

The report can be found at:   www.usafricainvestment.com

Among the conclusions I found:

“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.”

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The report is in two parts:

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.

Part Two: The response of African political and government leaders to these private sector views will be telling; what is the conversation about FDI behind government’s closed doors, when policy is made?

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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.

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From the www.SustainabiliTank.info   angle we found the most important comment to be:  

“Africa may want to consider the benefits of encouraging US Corporations whose stated desire is to employ Africans, unlike others who merely exploit African mineral resources without contributing to local employment. Africa may also benefit in the long term from the US approach of skills transfer and technology development, provided that its intellectual property is protected.” This obviously requires African leaders to help educate their people which might then also lead to the obvious requirement to allow in new spirits such as more democratic stiles of government and distribution of wealth produced from this more intimate interaction with the outside world and we hope that this can be agreed upon for a true benefit of Africa.

If this study could open African eyes to such potentialities, then the study might indeed provide the positive basis for moving Africa away from the present dead point where the export of commodities such as oil, minerals, and diamonds, are the one way connections that masquerades as business relations between African governments and US corporations. On the other hand, the US public will have to allow also the opening of the US market to goods manufactured in Africa.All of this while US corporations become also investors in the creation of a more developed African internal market.

The report was brought to our attention by   Fabiane Dal-Ri   –  fabianedalri at usafricainvestment.com style=”text-align: center”>

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