This is a special feature on conducting business in one of the world’s top business frontiers from the November 2014 Black Enterprise magazine issue, written by Richard Spiropoulous and Derek T. Dingle.
A Continent of Opportunity
“The time to do business in Africa is no longer five years away.” Even though Commerce Secretary Penny Pritzker was addressing major corporations at the Forum, small and mid-sized businesses should heed her clarion call.
[RELATED: CLICK HERE TO READ PART ONE]
Check out the facts on Africa’s roaring economy. The Economist reports that seven of the 10 fastest-growing economies can be found on the continent: China; India; Ethiopia; Mozambique; Tanzania; Vietnam; Congo; Ghana; Zambia; and Nigeria. Over the past decade, real income has increased more than 30%. According to the African Development Bank, the middle class has tripled over the past 30 years to 355 million, more than 34% of the population. KPMG Africa found that Africa’s growth rate continues to rise, with sub-Saharan Africa’s 2013 growth rate of 4.7% set to exceed 5.2% by year’s end—significantly outpacing the developing country average of 3.9%. The World Bank’s latest analysis of the continent’s economic status, links its growth rate to increased investment in natural resources and infrastructure as well as strong household spending.
More good news on long-term growth prospects: Since 43% of the current population is below 14 years old, Africa will have the world’s largest workforce by 2040. And in terms of connectivity, Africa has more cellphone subscribers than Europe.
Former President Bill Clinton cited at the Forum that the U.S. has ceded ground to Europe and China in building vital business relationships on the continent. Despite growth in oil, gas, and precious metals, he says firms can cash in on the need for “economic diversification.” He views greater access to the power grid and usage of mobile devices as prime opportunities.
Rosa Whitaker, CEO and president of the Whitaker Group, a Washington, D.C.-based consultancy specializing in trade and investment in Africa, maintains that Africa has been “America’s blind spot” for far too long. Says the former assistant U.S. trade representative for Africa for the Clinton and George W. Bush administrations: “In 2009, China overtook the U.S. as Africa’s largest trading partner, and China now has a $200 billion trade relationship in Africa compared to America’s $85 billion. We cannot afford to ignore the region with the fastest-growing consumer class and the fastest-growing consumer market. More than $1 trillion in consumer spending is African.”
Former U.N. Ambassador Andrew Young, honored at “A Gathering of PanAfrica Leaders” last August, has been encouraging African Americans to conduct business with Africa for decades, and for good reason: The return on investment in sub-Saharan Africa is more than four times greater than the return here. “Africa is the hope of a stable global economy,” he says. “There’s no question that Africa is the wealthiest continent on the face of the earth, but its wealth is more than its markets and its minerals.”
But there are barriers to entrepreneurial activity. As long as the threat of the Ebola virus continues to cast its shadow across West Africa, borders with the hardest hit nations—Sierra Leone, Liberia, and Guinea—will likely remain closed. According to the World Bank, unless the epidemic is quickly contained, the outbreak of Ebola could cost the West African economy $32.6 billion by the end of 2015, though the economic impact could be limited if action is taken now to stop the fear which has driven neighboring countries to close borders and suspend flights as well as companies to halt commercial activities. (See reports on BlackEnterprise.com.)
Another challenge: The African Growth and Opportunity Act, better known as AGOA, has yet to be reauthorized by Congress. The 14-year-old law, which expires Sept. 30, 2015, offers tangible incentives for African countries to open their economies and build free markets. Meeks says the act has served as another door for small and minority-owned U.S. businesses to establish relationships with African entrepreneurs. And the Export-Import Bank was granted a nine-month extension before its charter expired on Sept. 30, 2014, but many remain worried about its future. If the export-financing agency is not reauthorized by June 30, 2015, large numbers of small businesses will not gain the assistance they need to sell products abroad. The agency recently reported that it supported more than $2 billion in minority and women-owned business exports in fiscal year 2014.