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Making Africa investment-friendly

By Editorial Board
26 November 2018   |   3:12 am
A report that African political leaders and their business counterparts rose from a meeting recently in Johannesburg and resolved to dismantle all disincentives to sustainable investment in the continent has raised a glimmer of hope for the rising continnent. We can only wish them God’s speed to achieve this objective as quickly as possible.  Nevertheless,…

President Cyril Ramaphosa of the Republic of South Africa; President Sahle-Work Zewde of Ethiopia, President Alpha Conde of the Republic of Guinea; President Macky Sall of Senegal; President Nana Dankwa Akufo-Addo of Ghana attended the Forum. Other officials included the Vice President of Nigeria, Yemi Osinbajo; the Prime Ministers of Rwanda, Edouard Ngirente and Cameroon, Philémon Yang, as well as ministers representing the Kingdom of Morocco, Cote d’Ivoire, Tanzania, Niger, and Gabon. In attendance also were Governors and Board members of the African Development Bank.

A report that African political leaders and their business counterparts rose from a meeting recently in Johannesburg and resolved to dismantle all disincentives to sustainable investment in the continent has raised a glimmer of hope for the rising continnent.

We can only wish them God’s speed to achieve this objective as quickly as possible. 

Nevertheless, like many policy pronouncements by political leaders, and business intentions –and even proposals by the organised private sector operators, Africa is replete with uncountable unrealised intentions, plans and expressions of commitment by its leaders to take one measure or another toward raising the continent out of  poverty unto a respectable position on the global stage.

Some have even called the continent a graveyard of lofty ideas.

Generally, the deterioration of the economic condition of the continent over the years has a correlation to the deterioration of its political leadership.

The citizens are aware of this unfortunate trend. And because political leadership is a key determinant of the direction, performance and fortune of other sectors, persistent mis-governance has engendered a range of factors that discourage investment in this otherwise resources-rich and therefore, investment friendly continent. 

Africa Investment Forum is just one of the many fora that take place in Africa, Europe and other foreign cities around the globe, with the aim to woo foreign investors in and attract them to Africa.

A lot of precious foreign exchange is expended on these events often attended by a retinue of government officials many of whom add little or no value to achieve the sole purpose of the trips, some say jamborees.

Much money and executive time have been wasted on many meetings, conferences, seminars and master classes talking on attracting foreign direct investment (FDI) with too little to show for these ‘efforts.’ 

In truth, it does not require the wisdom of Solomon to attract investment into Africa if only African leaders can simply meet a number of even basic conditions that, together, may be the termed ‘favourable investment environment.’

For, if a destination is made attractive for investment by the people, investors will naturally beat a path to its door, in a manner of speaking. 

First and foremost, investors desire political stability that enable long term planning and projection. They do not like their investments to suffer from sudden changes of government and consequent economic policies.

Besides, disputable and violence-prone elections and coup-d’état, discourage investment into any region.

Unfortunately, these are characteristics of most African nations that profess to seek foreign investment. That will remain difficult as long as most countries in the continent are politically unstable.

Sudden, arbitrary policy changes by even a stable government discourage investment. In many African countries that are still largely under the rule of man (or a cabal) instead of the rule of law, policy decisions are unpredictable because they are hardly guided by the rule of law. And, in some of these countries, the recourse to due legal process for redress of an injury takes such contrived obstacles that it may be wiser to walk away. 

What is more, investment will flow to where there is security of life and property. How many countries in Africa are sufficiently safe that foreigner would come along with their money to do business? Only a few of the 54 countries on the continent.

Just about every country has a degree of insecurity but of course, since no country in the world is completely safe, there are a handful of stable African nations where life and property are reasonably guaranteed against sectional violence of any hue, kidnapping, and armed robbery. And so investment will flow to such safe destinations.

Official corruption is a major impediment to investment flow in any parts of the world. Granted that an investor is coming to make money, he is also coming to create jobs, impart skills to the locals and to generally add economic value to the nation. It is not as if African countries do them a favour.

Alas, corrupt high profile public officials want a cut out of the investment, either in form of cash payment, or a seat on the board of the corporation, or some other improper reward for allowing an investor to do business. 

That is at the high end. At the low end, the moment any one arrives from a foreign land, officials at the airport demand instant gratification.

In varying degrees, corruption is alive and well in African countries. For people coming from other climes, with higher, even if not perfect standards, the prevalent culture of ‘what is in it for me “in Africa may run against the way they are used to, and  can strongly discourage doing business here.

All told, the point must be made that crooked dealings are not at all limited to public office holders.

The business class has its fair share of corrupt actors. But, unlike in the public arena where the national economy bears the brunt somehow, somewhere, private sector operators know that they fully bear the cost of failed transaction that result from their unethical behaviour. 

There is something else more needful: Investment in critical infrastructure is the most urgent need of African countries. And foreign investors are willing to get involved if they are assured of a fair return on their input.

It is regrettable that in many African countries, besides that project costs are most times overbloated to accommodate greed of corrupt government officials, loans and even internally generated revenue are wasted on white-elephant projects and frivolous expenditure.

Investors bring in hard-earned money; they may not be willing to share to thieving officials or expend on projects that have neither social nor economic value. 

Three things are urgently required of African leaders. First, until African leaders do what is right and proper with the resources available, as well as walk their often-mouthed desires and commitment to attract foreign investments, it is difficult to see how much can be achieved by endless talk shops in city centres.

Second, many African countries do indeed have tonnes of money generated within their economies.

If their parasitic, thieving elite would just stop stealing public money to keep in foreign economies, there can be substantial internally generated financial resource to improve the lot of the continent.

Third, African Continental Free Trade Area (ACFTA) is conceived to make the one billion strong 54 countries of Africa with a combined GDP of $3.4 trillion an economic behemoth.

If consumated into a single free trade area under a single customs union, ACFTA can fast-track Africa’s economic transformation. But that lofty and most desirable goal depends on the will of the continent’s political and the business leaders to bring it to pass.  

More action and less talk is needed, now. In the main, African leaders should also not discount the expediency of robust investment in quality tertiary education, which can produce the needed manpower to sustain investment in the continent that the world has come to know as ‘the next frontier.’

In other words, it is only quality in research and development that can nurture growth in this big data age. No doubt, Africa too needs great universities as centres of technologcal excellence.