An Africa Business Community
The African economy is mainly based on agribusiness, oil, mining and in some parts: tourism. For really taking off economically, the continent has to develop competitive industries and services. In which branches can Africa be successful in the next two decades?
Chimaobi James Agwu, National Director BNI, Lagos - Nigeria: 'This question is a difficult one to answer. Before now many an ecomonomists have attempted profering answers to Africa's economic and industrialization issues without the continent remaining stagnant. Not because their analysis is wrong, but because of the twin problems of political-economy and global market place and shortsightedness of African leaders. In proferring an answer, we must never be negligent of what other regions of the world, in particular Asia and South America, who are on the economic platform with Africa, do. Africa is an unstable political platform. It is also an unstable economic platform. First Agribusiness will not and cannot take the continent anywhere. Reason: primary products have never improved any Nations wealth. Primary products are not very competitive. Oil cannot take us there either, it would only improve our situation a little. Other nations have oil and the more oil discoveries the lower the price. Tourism is neither here nor there. It is similar to agribusiness. It would only wear us a new garb but cannot take us to the world platform. What Africa needs and the branch of economy that can take us out of the woods is MANUFACTURING AND PRODUCTION. Adding value to our natural products be it agricuture, mining or petroleum. The above is what made England, Japan, China and the USA. The African experience cannot be different. It is only when our productive capacity improves that our income, employment and negotiation ability can go up pari-passu. Anything short of this is a vicious circle.'
Donovan Marks, Managing Director Proof Holdings, Johannesburg - South Africa: 'Given our natural resources, Africa will remain a dominant player in the mining sector for many years to come, the key is to look at developing industries that support that industry. In other words developing industry around adding value to the minerals, not just selling the raw mineral to be processed elsewhere in the world and then sold back to us at a premium. So we need to grow this sector to add value to that commodity. The question is very valid, what happens when this resource eventually runs out, it certainly will not be in the next 20 years, but at some point it will. If we see what the Emirates have done knowing that oil will not last, we should take a leave out of their book. One of the major aspects given our global positioning and land mass, would be renewable energy sources, be it wind, hydro or solar, we have the ability to pioneer this field, the space to do it and the people to train and skill. So I see Africa seriously looking at growing this area. Another aspect that is forgotten is agriculture. We have vast land masses that can be utilised to grow crops and other food sources. This is another area I believe we have allowed to dwindle and it needs to be revived. We need to have farmers growing crops, soya, fruits, vegetables etc. There will be a growing need to feed people as the world population develop and Africa posses the ability to meet that need. So I see great potential in this area.'
Andy Dale, Managing Director New Boogaloo, Arusha - Tanzania: 'There are two issues here:
We need a better educated workforce and we need better Governance. With the present level of education in the workforce there is no hope of developing industries that need anything beyond minimum wage labour. Governments - certainly the Tanzanian Government - are reluctant to issue work permits which often kills investment stone dead. If trained people are denied access and the country has none then investors will walk away. If the trained people are allowed in then the jobs will be created and some on the job training can take place. Unfortunately the raw material that management has to work with is of such poor quality - through no fault of their own - that genuine development can’t take place. Better Governance covers many areas from the above mentioned education of the workforce through to the Legal system, National Infrastructure, Tax regime, Corruption, Medical Care etc. All of these affect the ability of a Nation to develop beyond extractive industries and peasant farming.'
Julian van der Nat, Owner General Manager Fresh, Gaborone - Botswana: 'The question should emphasize the word “can”. Africa can achieve a lot of positive things, yet we always seem to underachieve. It is time for us to stop blaming the colonial past, and start taking responsibility for our own future.
Take the DRC for instance, and I’ve been there. They have more than 40 years of self-rule, huge quantities of natural resources, and all the potential in the world for tourism, development and even just providing for themselves with a population of 71 million. Yet, they don’t. The perpetuation of a system of political patronage, pillage of state assets and impoverishment is proof that the DRC state is beyond reform. Foreign-backed reforms have not produced any sustained improvement; rather tens of billions of dollars have left the country through capital flight and fraudulent sales of state assets. In terms of food security, the country is poorly endowed, mostly due to a non-functioning political system. The Democratic Republic of Congo has extremely alarming levels of hunger, according to the 2009 Global Hunger Index report released on October 15, 2009. "Of the ten countries that have seen the largest increase in their Index scores, nine are in sub-Saharan Africa, and the Democratic Republic of Congo's (DRC) score has increased by an appalling 53%" said the report.
Like all good business analyst will tell you, eliminate the negative and then enhance and build on the positive. So, to understand in which branches Africa can be successful in the next few years, the first step would be for her to change her attitude and political will. Then, let us see what she can offer.
1. Natural Resources. Probably the most abundant of all Africa’s resources. The past decade has seen their manufacturing move to China and India. The next few years could see high prices of raw materials and oil leading to more exploitation of Africa. Africa needs to start adding value to its natural resources. We need to move from being exploited and filling politicians’ bank accounts to creating jobs, manufacturing value added products from raw materials and keeping our wealth. In this category we also need to address the productivity. It is far from realistic to aim for all of these if the average person on the ground does not have the will to increase productivity to the same level as China, Korea, Japan or others.
2. Agriculture. With the world’s population increasing (expected to reach 9 billion in 2050) and the food supply dwindling, we are in the most ideal situation. Yet, we are not. We have vast soils, water and sunshine to produce at the same level as Brazil. Yet Africa looses nearly a third of her production due to poor infrastructure, bad logistics, poor border control, lack of political will and bureaucratic red tape infringing on free trade and the availability of planting resources (seeds, fertilizers, packaging, etc). If we can get rid of all the background noise, then we can surely feed the world.
3. Tourism. Wildlife, golden beaches, warm seas, friendly people, exotic destinations. Enough said. The only issue I have here is the continued practise of paying all the funds into a non-African account. Let me explain – Mr X goes on safari, he contacts his local travel agent who advice him to do the Okavango Delta, and then spend an additional 3 days tiger fishing on the Zambezi river. Nothing wrong, yet he pays all his money into an American account that only transfers enough cash to the lodge to pay salaries and buy supplies. This is partly the fault of poor governance (in some African countries like Zimbabwe) who could not protect property rights and forced business owners to “divert” funds, as well as greed that stimulates the drive to accumulate Dollars and Euros instead of stimulating local economies.'
Tony Ferreira, Owner Manager Franito Consultants, Nelspruit - South Africa: 'I think Africa can grow in the agro-industries since it possesses the land, in some instances the right climatic conditions and there are huge shortages of food worldwide. Africa would however have to create the necessary infrastructure to get food to the markets and implement proper strategies for water management. Another issue that is politically sensitive is the one of land ownership. Without land being allocated to investors with the necessary experience, agricultural development will not reach its full potential.'
Aaron Asante-Addai, Managing Consultant Envi-Logica Consult, Tema - Ghana: 'Agribusiness. Africa can be the bread basket of the world if the food production leverage is well utilized. First, Africa should learn to feed itself. That will be a huge step forward, and then feed the rest of the world. However, this would require the taking off of the economic shackles of unfair trade. France alone continues to ensure that West Africa remains divided along language barriers (so-called Francophone and Anglophone) and then maintains a stranglehold on the UEMOA, ensuring that there is as little trade as possible between them and the non-UEMOA members. These puppet shows must stop, for starters. Yet, agribusiness all the way.'
Muhammad Mohamed, CEO Clockworkapple Consulting, Cape Town - South Africa: 'The development of Africa will depend on developing the skills of its people on the principle of Ubuntu. For too long us Africans have accepted the technological breadcrumbs of the West. We do have the intellectual power to understand our material conditions, utilize scientific methodology and apply it to improve our living conditions. The advanced Northern Countries have created a smorgasbord of scientific knowledge and technological knowhow and we African need to be selective of what we going to chew on. The attractive looking item need not be the most beneficial, and the trick is learn the recipes or cocktails of science and improvise it with local flavours and gives it an African branding. Yes, why do we have to reinvent the wheel whereas we can become skilful improvisers of scientific knowledge, package it and sell it to the rest of the world. But to do this we need a will, skills and strong organization.'
Edward Aikobua, Kargo Business Information, Kampala - Uganda: 'I think Africa will be successful in Agribusiness, Hospitality, Mining and ICT within the next 20 years. Food is life and Africa is a reliable basket despite news of famine here and there. Many tourists visit Africa and they need good
affordable residentials to stay in, so more effort will be invested in taking care of them. Oil and minerals are being discovered in more previously untouched areas. Education is a priority in the whole of Africa and IT has liberated many, the best examples are the public uprisings in Egypt, Tunisia and Libya enhanced
by internet social networks.'
Malcolm Siebert, Managing Director SBS International, Randburg - South Africa: 'Given that the African economy is mainly based on agribusiness, oil, mining and tourism in many countries, the core heavy industries adding value to primary raw materials tend to be highly capital intensive and require high levels of specialised skills to operate effectively. In this scenario, the vast majority of entrepreneurs in Africa are excluded. However, there are countless downstream activities and opportunities requiring far less capital and less specialized skills that provide significant windows of opportunity for the continent as a whole. The one thing that Africa is not short of are entrepreneurs and some great lateral thinkers. However, taking these sometimes highly innovative ideas to market and realising the potential is an issue best explained by the almost chronic shortage of business skills that currently exist in this sector of the market. As I currently see it, there are two issues. Firstly, its not that there is a shortage of business training material of varying degrees of quality, there is almost a glut of service providers in this field. However, the cost of training, in many cases, is an impossibility in terms of affordability for those budding and existing entrepreneurs that would most benefit by it. Secondly, I perceive a lack of understanding of how mentoring and consulting can be utilised to develop embryonic companies into viable and sustainable business entities. Here again we run into the cost factor. In both training and consulting, cost to the entrepreneur is the primary barrier. I don't believe that this factor should be laid entirely at the door of the service providers as they too are entrepreneurs and cannot reasonably be expected to provide their services for grossly discounted fees or for gratis. But perhaps there is space for a new pricing model to be explored that will satisfy both supply and demand elements. For this to happen not only will the entrepreneurs and service providers need to play an active role but some form of top up funding will need to be secured from sponsors, NGO's or Government bodies. This is just a conceptual idea at present and it would be interesting to hear, other views on this topic.'
We would you to join next week's forum. This is the question:
What are the consequences - if any - of the Arab Revolutions in North Africa for business on the African Continent as a whole?
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