Foreign investors are becoming increasingly aware of the opportunities in Africa. Invest in Africa is an initiative that aims to connect foreign investors with businesses in Africa. The organisation is also sponsoring English Premier League football club, Sunderland AFC, whose players wear “Invest in Africa” on their shirts to promote the initiative’s message.[hidepost=9][/hidepost]
In an interview with William Pollen, the programme director of Invest in Africa, How we made it in Africa finds out why this initiative exists and how it plans to promote investment on the continent.
Can you give us a better idea of what Invest in Africa does?
It’s a purely business to business initiative; I think that’s the first thing to be focused on. It’s not for profit but it’s not a charity. So it focuses on working with existing businesses in Africa, like Tullow Oil and others who we are speaking to at the moment, to use their experience and knowledge – and their success quite frankly – to inspire and give confidence to other businesses and investors who may have been holding back on investing in Africa … who have maybe been afraid, confused, didn’t know where to start, who to speak to or didn’t know how to go about finding local suppliers or partners, etc. Those are some of the typical challenges investors face in Africa … and we are using companies who have been successful [in Africa] for many years to help them take their first steps and to – wherever possible – drive their investment into local African SMEs and, crucially, to make sure that the investment is both sustainable and brings about jobs on the ground for African firms. So it’s business to business.
How can global investors like Tullow Oil create opportunities for local African businesses?
I think the most obvious and immediate one is in the supply chain for a large global investor. Whether it is a multinational or international investor, you take somebody like Tullow, or a Diageo, even an MTN or a SABMiller, they all require support services both directly and indirectly. For Tullow Oil for instance, they require engineers and people who can work on oil rigs, who can drive trucks and all of that. Then they require support services – such as people to provide food to their staff, accommodation and financial services, etc. So as soon as a big business is established like Tullow then there are immediate opportunities on the ground for local firms to provide their support services. And when you look at something like Tullow’s business, when they go into a new area … they will be creating entire new industries. In many of the countries they first entered, there generally was not the local capacity and some of the core skills they required. So there are not enough locally qualified well engineers or welders or geophysicists, etc., and for the first number of years there is a lot of training that goes on so that the legacy that’s left behind is that you actually create a whole new sector that wasn’t there before. In 10, 15, 20 years time you have local Kenyan or Ugandan geophysicists, welders, engineers, etc, where previously there were none.
So opportunities can be very direct in the development of core skills needed, and then it can be in the spill over of support services, whether that be in the food industries, transport, distribution, etc. Then I think there are the less obvious opportunities … I think that when an international player comes into a market place where previously there wasn’t very many [players], naturally you get competition, drive through standards, and you drive greater competitiveness of prices for the end consumers. So competition is a key aspect. Then there are others like listing locally on exchanges, depending on the size of the business. Tullow is listed in Ghana. Other foreign businesses have local listings and that allows local people to buy into their business and have a local share of ownership in the business.
How would you describe Western perceptions towards doing business in Africa?
Typically, unfortunately, it is very clichéd and outdated. I think you will see a big difference between Western Europe and North America and the rest of the world really, particularly Asia. You see Western Europeans and North Americans still having this perception that, if you say Africa, the first thing they think of is either AIDS, starving children, poverty, corruption, war, etc. Whereas many of the markets [in Africa] are growing at eight times, 20, 50 times the rate of the growth we have in our own market places, and they have far more sophisticated forms of mobile communications and online banking, and payment by mobile phones in Kenya than we do anywhere in Europe and the West. So I’m afraid it is really stuck in the past in those respects, and funnily enough, that’s almost why putting those words “Invest in Africa” together on the Sunderland shirt was almost job ‘one’ done for us because so many business people have never put those words together. They always had in their head “Africa and aid” and “Africa and poverty”… So putting those words together visually on something like a football shirt, which is seen by millions of people was a very smart and powerful way of getting that misconception addressed.
So for Western audiences it is very much about demonstrating the realities on the ground and not necessarily banging the same drum that you hear a lot at the moment like these huge GDP figures. That is great, but as an investor what am I supposed to do with that? How do I take that home and turn it into a reality for my business? What we are trying to do is show them that these markets are not littered with corruption, danger and war but are actually, just like any other developing market, full of opportunities. But you just need to have the right long term mindset.
How have your own perceptions of Africa changed since working for Invest in Africa?
I went to Ghana earlier this month and previously I had been to Kenya and briefly Tanzania, and just the tenacity and entrepreneurialism and energy and the drive of the people, it really struck me. I had heard that was what I would sort of be surprised by and remember, but actually seeing it for myself was something different. The enthusiasm just to get things done, I think in a lot of instances [Africans] are so accustomed to being surrounded by a difficult environment, whether it be physically, politically, economically, or geographically even. They just get on and do it because there is no other way, and that really struck me. The sort of determination of entrepreneurialism to find a solution, I think that has been a bit of an eye-opener for me.