Editor’s note: Bhaskar Chakravorti is Senior Associate Dean of International Business and Finance and founding executive director of the Institute for Business in the Global Context at The Fletcher School at Tufts University, host of the 2012 international “Africa’s Turn?” conference. The views expressed are his own.
The countries we most obsess about from the emerging world – the so-called BRICS – met recently in Africa. Many see this as more evidence of an international scramble for the world’s greatest growth opportunity. But here in the United States, you would hardly know it. Instead, when the continent does come up in conversation, it is often in the context of “help,” conflict, misused development aid and woeful political leadership.
But we are at a turning point. The old story of Africa as the final frontier is being replaced by a new narrative: one of economic growth and opportunity. Business, policy and civil society leaders who spoke at our “Africa’s Turn?” conference last October expressed enthusiasm and cautious optimism for its future.
The U.S. perspective of needing to “help” Africa may start to look very dated as the continent experiences self-propelled growth and development led by a growing urban consumer class, enabling technologies such as wireless communications, and an emerging entrepreneurial sector.
The Nigerian finance minister, Ngozi Okonjo-Iweala, offers a simple piece of advice: to help Africa, do business there. It is time to take such advice to heart.
The U.S. business community ought to have a strong interest in doubling down on Africa. American businesses urgently need growth and a critical route to this is to penetrate the world’s fastest-growing markets. As it is, the U.S. is severely under-represented in such markets. According to a 2010 study by HSBC, only seven percent of the revenues of U.S. multinationals were generated in emerging markets. Africa’s contributions to this figure are significantly lower, even while it has been declared to be the world’s fastest-growing continent.
Measured in terms of trade, less than three percent of U.S. global trade volume is with Africa, and the trends have been downward since a peak in 2008. As a point of reference, consider that China-Africa trade was $127 billion last year, while U.S.-Africa trade was only $94 billion.
But we shouldn’t assume that it will be easy for U.S. firms to close the deal in Africa. One of the problems for American businesses leaders is that because of the absence of past relationships they have relatively little understanding of the markets, the consumers and the broader context of Africa. Many would be surprised to know that there are so many distinct markets and peoples across this vast continent. The generic business perspective of Africa is based on experience in a few “front door” countries, such as South Africa, Nigeria and to a lesser extent Kenya and Ghana.
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