|The business route into Africa has not got crowded yet. Therein lies the opportunity.
The BRIC nations caught the fancy of the world a decade ago & the glitter has been under severe question (some might even argue is slowly fading) given the economic & political turbulence in Brazil, Russia and India. Only China has retained its promise despite periodic questions on the veracity of its economic data. The next set of nations to watch for they say is the MINT countries (Mexico, Indonesia, Nigeria & Turkey). The one that has really caught the eye is Nigeria. Caught in the crosshairs between bad social reputation resulting from extreme ignorance & poor PR and immense economic potential, in many ways it epitomises the potential that is Africa.
First, a caveat: any discussion of Africa must begin with an explanation that we are referring to a continent with 55 countries (as recognized by the United Nations), spread over a large land mass, with not just different language & religion but with different economic & political models. Therefore, generalization of arguments is fraught with danger and liable to errors. However, having said that, for the limited purpose of this feature, let us accept that there are many common elements that can be viewed for a large part of the continent.
With this preamble out of the way, let us explore what makes Africa an economic sleeping giant. Take demographics for a start: 50% of Africans are 19 years or less and with over 1,000 languages, Africa is the most multi-lingual part of the world! However, what makes Africa a prized territory is the immense natural resources that it offers. Gold, diamonds, iron, uranium, copper, bauxite, et al, you name it, and Africa has it. And, of course the oil wealth of Africa is still largely underleveraged. The other new El Dorado is the immense potential of commercial farms & plantations that has been recently acknowledged as potentially the world’s most under-utilized opportunity.
So, is the new rush into Africa shades of a 21st century neo-colonialistic scramble for natural resources? One may well argue that it is so with both the West & China making inroads for tying up long term stake in the mining & other natural resources sectors across countries (for instance, Chinese firms reportedly own 40% of the oil production from war affected Sudan). But things may not be as dismal as it appears. The beneficial presence of these companies & countries is that they are also investing in building basic infrastructure in these nations, thereby providing a much needed fillip to the economy. The projects undertaken by China have extended from roads, railways, schools, hospitals to bridges and the grandiose ‘gift to Africa’, the African Union’s grand headquarters in Addis Ababa. And, more importantly, trade with China is helping African consumers too as they provide an affordable volume of goods to a constituency which aspires for modern amenities without having to pay the exorbitant western prices.
Therein lies a tale. What the mass markets of Africa require is a bottom-of-the-pyramid uniquely African solution appropriate to its condition. And, the BRIC nations can be the ideal partner for creating and offering this remedy, primarily because they too face similar situations in their home markets. Be it Brazil or India, the large population of these nations are building economic models (fuelled by rising demand for products and services) that are akin to those required in Africa. Since the fall of the Soviet Union, Russia has been too preoccupied with its own domestic challenges to pay sufficient attention to African markets unlike in the past, and China has played its card well to maximise the opportunities thrown up due the absence of the Russians.
However, what most African nations truly face is a governance deficit. This is one element that cannot be imported from overseas. In fact, indulging foreign interests is counter- productive in the long run and will only enhance the neo-colonialistic tendencies and shackles which were dispelled after major wars of liberation.
The scourge of AIDS remains a threat (with about 10% of the population being HIV infected in 9 countries) but thankfully is being contained. The true route to development lies in raising education standards. Sub-Saharan Africa has a literacy rate of 63% but there are parts of the continent where the rate is as low as 22%, with women being the most neglected as always. Education creates awareness and becomes a lever to all other issues for achieving the UN’s Millennium Development goals, be it in health, social, economic & ultimately political.
Yes, political instability & corruption are factors of concern, as is law & order, but these need not deter investments for growing the economy. What is now required is positivity towards the business opportunity that is on offer. No longer should Africa be seen as a basket case, but a WIP (work in progress) market economy, and the relatively stable countries of the continent (Nigeria, South Africa, Kenya, Zambia, Ghana, Ethiopia, to name just a few) & arguably should be viewed with a different lens.
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