In Pictures
Major Trading Currencies
World Market Watch
Crude Oil
Management Tips
If you ask your employees to work overtime, be there too. Just because company policy allows it, don’t fly first-class if your associates are in coach on the same plane. Be a leader – it’s tougher than being a manager, but it’s worth it.
- General News
- ICT
- Tourism
- Insurance
- Investment
- Oil And Gas
- Politics
- Sports
- Feature Articles
- Editorials/Opinion
- Entertainment
- Africa/International
You Are Here: Home » Investment, Lead Story » Why US businesses are not investing in Africa as they should – Report
American businesses are not investing in Africa as they should due to a number of reasons including corruption, lawlessness unstable governments and inadequate infrastructure.
They are also hesitant to put their money in African countries because of the apparent lack of political will by African governments to curb corruption, a report released Wednesday May 20, 2009 by Baird’s CMC, a communications marketing consultancy together with the US Chamber of Commerce.
The report a copy of which was made available to ghanabusinessnews.com indicates that, overall, US businesses do not view Africa as an attractive place to invest.
The businesses take into consideration, the image of lawlessness, corruption, unstable governments, an inadequate infrastructure, uneducated or untrained people, and an unwelcoming government attitude toward business.
The businesses believe that these practices handicap those who will not or cannot “play the game” by these rules.
In addition, returns are not reasonably ensured or sustainable because costs can often escalate for reasons unrelated to business operations and the rules can change unexpectedly. This means that the time and resources already invested could be lost, the report said.
The report which is titled ‘The conversation behind closed doors: Inside the Boardroom: How Coporate America Really views Africa’ is in two parts, the study for the second part is ongoing.
The US Chamber of Commerce which is the world’s largest business federation has a membership of more than three million businesses and organizations of every size, sector and region as well as 112 affiliates in 99 countries around the world.
One of the objectives of the qualitative survey was to examine why US companies hesitate to invest in Africa. It also looked at what American businesses and African countries can do to increase US investments across the continent.
Ten industries were looked at in the survey and these are, aerospace/defense, agribusiness, consumer goods, health care and information and communications technology.
The others are, infrastructure, media, petrochemical/extractive, pharmaceutical and transportation.
Top management decision makers in 30 leading U.S. multinational corporations participated and majority were executives of U.S. Fortune 100 corporations.
The executives who were interviewed, the report indicated, do not yet believe that they are at a competitive disadvantage because they are not investing in African countries.
According to the report, with no competitive traction, there is no sense of an opportunity being missed. Furthermore, since Africa is not selling itself overtly by asking for investment, the continent does not attract enough attention amidst competition for investment from other developing countries or regions. The only exceptions to this are China and India.
While the report recognized the fact that African countries are marketing themselves and creating the environment to attract investments, the lack of the following is a disincentive:
The fact that the rule of law does not prevail to the degree required to make Africa an attractive investment destination. This applies to corporate, societal, and criminal law.
Africa, the businesses observed, does not offer a sufficiently large middle class of consumers or show consistent economic growth that could promise a future market. Most African countries are small and have poor markets, and there are barriers to regional markets—such as taxes and the freedom of movement of people and goods.
According to the report however, if African countries want to position themselves, to attract a lot more foreign direct investment (FDI), from America, then they should do several things including the following:
• Invest in the health and education of the African people to create a large pool of skilled and productive human resources.
• Invest in and maintain infrastructure—transportation, communications, electricity, and security—so that there will be a reliable society in which to operate.
• Build a functioning legal system to ensure the rule of law, transparency, and fair play.
• Create a positive climate for foreign investments by reducing bureaucratic processes, eliminating corruption, and reforming tax systems, irrespective of country of origin.
• Ensure stable political environments—that may or may not be based on western democratic principles—that work toward the common good of all stakeholders in society.
By Emmanuel K. Dogbevi
| 
| Tweet This! |
my name is mr terry i have seen a lot of people in africa suffering for so many problems and one of the major problem is lack of developement for the people. i believe if the government can raise 1million euros to my organisation i believe everything will be settled in your country. if are interested u send a message to my email address. then i tell your government on how to transact the money to our organisation. mind you we indeed happy to see your site and very happy to help. like our organisation has up to 3million euros to help your continent like to help the poor ,by giving them shelter and helping them to have a normal life.
Allegations of lawlessness in Africa are unfounded. My country Uganda has one of the lowest crime rates in the world.
There they go again…the issue with USA is while they pay attention to the AMERICAS market China and India are making headways into the bread basket of the world. Africa. USA business people do not have the “Balls” to do business in Africa .plain and simple. You need hard core Europeans and Asians folks who do not mind driving on a single lane for 6 hours to get to a remote village. Americans have things too easy and back off as soon as they encounter issues. Why blame them!!! There are more opportunities in America for them now…the future though I am afraid is in Africa.
I am a liviing example of what this article is about. I am a Ghanain and a few years ago i organised a few friends from the United States to invest in a private university in Ghana. Our school has met the written stardards since two years ago to receive accreditation yet corrupt officials have refused to accredit the school. Investors have lost so much money they want to file a lawsuit against the Goverment. Unless you recieve assurances from the executive level of goverment regarding your investment,please do not attempt to invest, you do so at your own risk.
I agree with Anthony. U.S. businesses just don’t have the “BALLS.”
Investment takes research, not just plain speculating that comes from businesses with casino type mentalities.
Yeah!i believe USA doesn’t want to invest in Africa as it has been too late.Moreover, USA doesn’t have the backing as that the chinese and indians have.China and India has the ball not USA.Its simple that USA is quite busy in looking the next market over its own country rather than foreign investment at the moment.
There’s a number of african countries that have experienced political stability for a long time, take for example zambia. It’s unfortunate that the US and Canada are selling most of their companies to china putting it at an advantage to rise to a powerful nation and become their opponent. The least they could do is pick out a few of the stable african nations and take some of their manufacturing companies instead of sending them all to china. This will do them good!! I think that this will also help out the corruption situation as more people will have jobs and the economy is going to improve. Right now, the SMART people realize that Africa is, in fact, an EMERGING emerging market. It’s one of the few, wide open economic opportunities that still exists. Sure there are drawbacks and uncertainties. But many countries in Africa have good business opportunities, low taxes and a relative lack of red tape.
There is an attitude problem in America when it comes to Africa. If you read the response of Chinese businessmen in Africa, they say there is so much opportunity and absolutely no competition, where is everybody? Do the Chinese have some kind of magic supepower that they can efficiently invest and run businesses in Africa? Is it because they are backed up by the state so they can make a loss? Whatever it is, the US needs to get with it because China is securing stable natural resources, unlike our Middle Eastern supplies where we have to fight costly wars every ten seconds in order to maintain them.