Foreign Direct Investment (FDI) into Africa will never transform the continent, but government’s support to local businesses will create social development and drive growth says the Managing Director of Kasapreko Company limited, Mr. Martyn Mensah.
In an interview with B&FT, Mr. Mensah said there are a number of success stories emerging from African entrepreneurs who have proved that with a little financial push and an enabling business environment, much can be achieved in promoting private investment and closing the poverty gap in Africa.
“We must look within; there is potential in African entrepreneurs. We have the capabilities but our governments must encourage local businesses to be agents of change on the continent.” Governments throughout Africa have been adjusting policies to better compete for FDI by, amongst others, developing investor-friendly immigration laws; offering tax-breaks; creating industrial parks; promoting trade facilitation; and protecting property rights.
According to a report “It’s time for Africa”, by global accounting firm Ernst & Young, FDI into the continent is forecast to reach US$150billion by 2015 from US$84 billion in 2010, driven by strong growth in new projects from next year. The report said the continent is becoming increasingly attractive to international investors planning new developments and expanding existing ones, and that perceptions are becoming increasingly positive over the longer-term.
“While Africa's challenges are well-documented, there is an increasing recognition that the continent is on an upward trajectory economically, politically and socially,” Ernst & Young said in its 2011 Africa Attractiveness Survey. It projected GDP to grow to US$2.6trillion by 2020 from US$1.6trillion in 2008 and consumer spending to increase by 62 percent to US$1.4trillion over the same period.
Key sectors targetted by investors include consumer products, construction, telecoms, financial services and mining and metals -- perceived to have the highest growth potential over the next few years. The survey showed emerging market investors were positive about Africa's attractiveness, viewing the region as critical to their own growth, while developed markets investors were cautious - saying that the region still needs to develop further.
The African continent, home to one billion people, has long been ignored by international investors who only thought of the region in terms of political instability and corruption. But Mr. Mensah, who will be speaking at the upcoming Vodafone African Business Leaders Forum (ABLF) in Accra from 10th – 12 November 2011, believes partnerships between governments and the private sector are key to speed up development in Africa.
However, he said “Until and unless African governments’ motives go beyond elections and parochial issues, and they start to align the vision of the country with their actions, this idea will never work.
“There can be partnership between governments and the private sector in areas like infrastructure, but it requires thinking and designs.” African governments, he stated, bear the main responsibility for the continent's development and need to work harder to create the right conditions and incentives for partnerships.
This year’s ABLF is under the theme “Enhancing Africa’s Business Opportunities through Effective Public-Private Partnerships”. ABLF aims at addressing leadership issues in Africa through creating a conference platform for proactive and practical responses to current challenges. The forum examines African history and mythologies, and creates an opportunity for African leaders in the public and private sectors to examine mutual challenges.
It provides an interface for stakeholders in these sectors to learn and make contributions to African leadership challenges. On the issue of Africa’s prospects, Mr. Mensah noted that Africa has a great future, but African leaders must create good structures to realise them. “Our leaders must have a legacy mindset. Businesses on the continent should last forever and not for 3 to 4 years.”
He stated that leadership is anchored on values, clarity of purpose and possession of an interpretative understanding of the issues as well as being armed with the requisite knowledge and mechanisms required for confronting the challenges of development. This, he affirmed, holds the key to the sustenance of Africa. “Leadership is a value-laden concept, and it is critically imperative for Africa to build a consensus on shared values. “Such shared values must underpin both horizontal and vertical personal group and institutional interactions across the Africa.”
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