Some Highlights From The Africa Attractiveness Survey 2013


 

Original post on Developed Africa

It’s always an exciting time of the year when the Ernst & Young Attractiveness Survey for Africa comes out as it offers some fascinating narratives about how Africa might be going forwards and how it might be going backwards. That being said, it is pretty long and number filled so I thought I’d do a brief highlight reel for the lazy busy people out there.

Seriously though, do read it if you get the chance – here’s the link.

The 2012 edition of the Survey focused on the huge jump in foreign direct investments (FDIs) in Africa – up 27% from the original survey in 2010 – and stressed that, despite the criticisms, the narrative surrounding the continent’s rise should be told “more confidently and consistently”. The new edition continues this bullishness, it’s Executive Summary titled, “Africa’s rise is real”. Ernst & Young focus on economic facts and dismiss any scepticism out of hand – this growth is consistent, it is diverse and it should be celebrated.

The story is not totally one-sided, however, as FDIs have decreased in the last year despite the ongoing rise in global esteem that the continent seems to be going through. Greenfield FDI projects were down 12% from 2012 – although, that is in a global context where all such projects were down 15%. There are other issues, too, such as the perception of conducting business in Africa. Again, despite Africa’s rise, many foreign investors remain unwilling to do business there. As it states on page 5,

However, the big take away for us from this year’s survey is the stark and enduring perception gap between those respondents who are already doing business in Africa versus those that have not yet invested in the continent… those with no business presence in Africa are far more negative about Africa’s progress and prospects. Only 47% of these respondents believe Africa’s attractiveness  will improve over the next three years, and they rank Africa as the least attractive investment destination in the world.

As Developed Africa recently highlighted, the potential of African business is being severely limited by the lack of proper communication about how much commercial potential there is. Developed Africa seeks to directly combat that so do check out our homepage for more.

The good news is that the percieved attractiveness of various sectors in Africa has improved allowing for more diverse business models. As stated on page 41,

There has been a marked shift in perceived sector attractiveness; resources remain top of the list, but not by far, with infrastructure and some of the service sectors gaining considerably in prominence

Previously unheralded sectors like Education, ICT or Financial Services have become hugely more attractive, complimenting the long standing interest in commodities and energy related projects in the region. This is a terrific opportunity for entrepreneurs and established businesses alike to move into new and exciting ventures.

The survey ends with a section focused on how Africa can continue to grow in the next year. The first point this section makes is to stress the vital importance of FDIs to the region. These act as catalysts for intra-continental trade, improvements in infrastructure and job creation. Africa has the largest employable population in the world and will continue to grow with or without foreign investors. However, it will grow faster and more effectively with the injection of funds and the creation of international commercial partnerships.

The conclusion on page 64 puts it neatly,

Business has to be viewed as an essential partner in driving the growth and development agenda.

P.S.

I threw in that Eric Hersman talk as it fits E&Y’s bullish narrative and who doesn’t need an excuse to watch it again?

Business First, Human Rights Later – Why the disconnect?


I know that the answer is 'the egg'. I'm just trying to illustrate a point alright, give me a break a break.

Source: 24expo via Stephanie on Pinterest

I have recently been writing reports on the state of freedom of expression in four countries in the Horn of Africa: Djibouti, Eritrea, Ethiopia and Somalia. As you can probably guess, things aren’t amazing there. The GDPs are low, the governments are stupendously powerful, corruption is high and the whole region seems to be on a knife edge in terms of both food security and the ever present threat of invasion (from within and without). Things like the right to free speech or free assembly are pretty much on the back burner.

Many people would argue that human rights necessarily need to be ignored for development to occur. They can come later, once things are established and the economy is moving – then we can worry about voters’ rights and other silly things like that. Harvard professor Calestous Juma is a high profile proponent of the ‘infrastructure first, human rights later‘ model, arguing that concerning oneself with human rights before the infrastructure necessary for economic success was in place is, at best, a needless distraction; at worst, willful neglect. A few weeks ago, an English man in a Nairobi bar, on hearing that I worked for a human rights organisation, jabbed his finger at my chest and declared that I was “the fucking devil”. Obviously, a rights-based approach has its detractors.

Some people would suggest a less hardline position: while sometimes useful, rights based programming can be counter productive when applied to certain field situations. A recent post by Weh Yeoh of whydev.org – ‘When talking about human rights is irrelevant’ – outlined an example where he felt this to be the case. He was working in China and felt that his colleagues were too culturally and educationally disconnected from the whole notion of rights based programming for it to be useful. The situation, the context, didn’t fit the solution – how often have we heard that complaint regarding a ‘international development’ intervention?

These are fair points, particularly in a strictly not-for-profit, development paradigm. But few people would argue that such a model seems likely to be the story of Africa this century. It is booming. Of the 10 fastest growing economies of the next five years, 7 are predicted to be African. The title of the Ernst & Young Africa attractiveness report of 2011 was ‘It’s time for Africa‘. China and India have long since moved in, Brazil and Russia are looking to do so. Everyone is.

Now look at that Ernst & Young report again – turn to page 23 – and check out the list of factors that dissuade potential investors from pouring capital into Africa. Lack of infrastructure is on there with 17% of responders (large potential investors from all over the world) choosing it. However, above infrastructure concerns come corruption, 22%, and unstable political environment, by far the most concerning factor at 41%. The link between the latter and a promotion of human rights is well documented – liberal democracies have fewer wars and less famine, cases argued very famously by smarter people than me. But what about corruption?

A quick look at Corruption Perception Index 2011 – a ranking of how corrupt a variety of stakeholders perceive countries to be, very much related to the chances of foreign investment – shows that 9 out 10 of the worst countries are also ranked ‘Not Free’ by Freedom House’s Press Freedom 2011 report. There’s a reason people protect the free media and the right to free speech. Acting as watchdogs, as whistleblowers against the excesses of government is a vital role. Without it, countries not only become worse in terms of standard of living, they also become less attractive to investment. This is no moral issue: huge corruption makes the costs of investment larger because of all that unavoidable greasing of palms involved in working in very corrupt countries. At a certain point, corporations don’t stand to gain so much from such deals and take their business elsewhere. Why wouldn’t they?

Of course, corruption can be fought, effectively, by non rights-based policymaking. I hear you, detractors, I hear you shouting ‘Rwanda’ or ‘China’ for places attracting investment without human rights underpinning their performances. Cursorily, I’d reply that both are too early in their respective booms to have reached the ceiling where it starts to hurt them. Failing that, essentially, I would argue that, if you can combat corruption by promoting human rights and thereby improve people’s individual liberties, why wouldn’t you?

You have growth, you have improvements in people’s lives, you have freedom. It is at this point that I lose the plot a little: is the desire to create the most powerful economy so great that you would willingly choose to emulate China (regardless that it is probably not possible in most places) and all the abuses against your own citizens that that entails?

Human rights and business don’t have to be incompatible. It seems to me that a dogged pursuit of the latter at the expense of the former is ideological, a decision that ends in people suffering despite profits increasing rather than being able to enjoy their prosperity. Why choose that?