There are good reasons to worry which countries might follow Greece into tailspin of the ongoing debt crisis. But U.S. business would be wise to watch for the next market rise, not fall.
CEOs and investors look to emerging markets to provide growth, but unfortunately, Africa in particular continues to be seen as too risky for investors, no matter how many times rock stars or economists tell us that Africa is no longer the unstable, chronically impoverished place that it once was.
As business leaders with a wealth of experience working on the continent, we know that Africa is rich in business opportunities that yield high rates of return for investors as well as increased opportunities for the people of Africa. U.S. business leaders should take a fresh look at Africa and the significant growth taking place there, or risk being left behind.
Africa’s 10-year track record of robust economic growth is expected to grow yet again by 4.5% in 2010 and over 5% in 2011. That’s considerably higher than the global average of 3%. Significant policy reforms, greater political stability, improved rule of law, and progress at reining in corruption have created a sea change of opportunity throughout the continent.
Take foreign direct investment as an indicator.
Between 2000 and 2008, foreign direct investment (FDI) to Sub-Saharan Africa increased from $6.7 billion to $32.4 billion. This sharp rise is a result of multinational corporations turning to Africa in increasing numbers and significant private equity and portfolio investments. However, the majority of increases in recent years have been from Brazil, Russia, India and China. Investments by the BRIC countries are flooding into Africa, while U.S. businesses are missing out.
Investments by multinational corporations are not only driving business growth, but are also having positive social impact, by creating the jobs that help people make a living. Coca-Cola’s Manual Distribution Centers(MDCs) engage independent entrepreneurs who distribute and sell Coca-Cola beverages. As of today, 2,800 MDCs have been formed, creating jobs for more than 12,000 people while generating more than $500 million in revenues for Coke.
In addition to creating jobs for low-income individuals, companies are seeing success in Africa by using pioneering approaches to sell products and services to low-income consumers. Equity Bank Group, a financial services organization, uses a state-of-the-art IT system to provide mobile banking services to low-income individuals and small and medium enterprises across East Africa. Since its inception in 1984, Equity Bank has become one of the fastest growing financial services organizations in the region, with over 4.5 million accounts and representing over $1.5 billion in total assets.
The recovery of the U.S. economy will be largely driven by external demand, and investing in emerging markets like Africa will spur that demand. At the same time, U.S. investment will spur broad-based economic growth and business expansion on the continent, which is the surest path out of poverty for Africa.
Explore the African frontier and be part of this exciting growth opportunity.
E. Neville Isdell, Former Chairman & CEO, The Coca-Cola Company , and James Mwangi, Managing Director and CEO, Equity Bank, are part of the Initiative for Global Development, an alliance of business leaders that champions smarter government policies and business initiatives to advance economic opportunity and reduce poverty around the world.