The Sunday Mail
Taurai Changwa Business Forum —
THERE is no doubt that compared to any other continent in the world, Africa still has limitless opportunities to explore.
However, negative publicity campaigns almost always cast it as a continent that is plagued by disease, war, corruption and poverty.
Granted, it is true that some destinations on the continent really test investors’ resolve, but it has to be considered that time horizons and return models that fit other markets don’t always work in Africa.
Even the most experienced, sophisticated companies can be forced to recalibrate.
Poor transport infrastructure and corruption are some of the major challenges that put off investors.
It is, therefore, unsurprising that roads, rails, ports, airports, power grids and IT infrastructure are not always in the best shape. And this lack of infrastructure often affects imports, exports, and regional business.
Inasmuch as this is discouraging, it should be considered that the scope of works needed to either construct or rehabilitate the continent’s infrastructure is an opportunity in itself.
It is often argued that governments need to come up with packages attractive enough to lure suitors for various projects.
With more than a billion people, inter-African trade, which is less than eight percent of the continent’s entire trade, is remarkably low.
The Tripartite Free Trade Area, for example, covers 625 million people in 26 African countries, but few of the countries are linked by an efficient transport system.
Clearly, there is a business case for investing in these multi-billion dollar projects as the rewards are likely to be huge.
Interconnecting markets deepens both trade volumes and trade values.
By their nature, infrastructure projects can stimulate the economy since they feed both upstream and downstream industries. From engineering, designing and consultancy, to the informal businesses that feed off activity in the construction sector, the opportunities are big.
However, for these opportunities to be exploited the architecture of African economies has to be reconfigured to rely on productive activities.
There are anomalies in many Africa countries where bureaucrats and socialites buy expensive vehicles to use on roads that are barely trafficable.
I was quite pleasantly surprised to learn from a Dubai car seller that most of their orders were from Africa.
While it obviously speaks to the level of affluence on the continent, it also highlights the unhelpful consumptive behaviour that is driving the continent backwards.
Of late, Africa now seems to be ready to do business. It is not only doing deals, but smart deals at that.
As economic reforms take root in many African countries and as risk slowly rises in countries such as the United States and the United Kingdom, which are shifting towards protectionist policies, there will come a time — probably in the short-term — when investors move their investments to Africa.
When that time comes, we should be ready.
Most deals that were signed by newly independent states after colonialism were fatally flawed. They tended to benefit investors at the expense of host countries.
Governments should not negotiate deals that are similar to colonial arrangements, which are exactly the reason why Africa is poor.
It must be made clear that business opportunities do not lie in infrastructure alone; adding value to raw materials is an equally lucrative business.
During its recent chairmanship of the African Union, Zimbabwe tried to push for industrialisation and value addition as a continental strategy designed to reduce reliance on exporting raw materials and importing consumer goods.
It is absurd for platinum-producing countries such as Zimbabwe and South Africa to continue to export unprocessed platinum, which is also used in the car industry, while importing cars, cellphones and jewellery.
Zimbabwe currently exports raw tobacco, gold, diamonds, raw sugar cane and other things.
Adding value creates employment, while processed goods fetch relatively higher prices than unprocessed ones.
There has to be deliberate and elaborate policies that encourage investments into value addition.
It is another window through which investors can be invited.
But there have to be concrete steps to promote a favourable investor perception of the continent.
Ernst & Young conducted an Africa Attractiveness Survey in 2013 which shows that despite the growth and optimism around Africa’s future, there are disparities in investor perceptions between those 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 percent 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,” says the report.
Policy making, however, is rarely simple.
More often than not, there is need to temper favourable investment policies with the need to protect local interests and local resources.
Notwithstanding the potential that Africa has, there is need to decisively deal with corruption. It is indeed holding Africa back.
Zimbabwe has all the assets and resources needed to become one of the best performing economies on the continent. Africa, Zimbabwe included, has to put its act together.
All signs point to the emergence of African economies as the next growth zones. Growth in Africa south of the Sahara Africa was one of the fastest in the world until recently.
So there exists considerable scope for investments.
