Elumelu's takeaways at African Investment Forum
- Written by Tony O. Elumelu
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Is Africa the Next Frontier for Global Investments? My contribution at the African Investment Forum (AIF) in Johannesburg today.
1. On the conversation around investments in Africa, it is not that people don’t want to invest in Africa – indeed there is so much private global capital looking for the right destination – but investors and their capital go to destinations that they are welcomed. Factors that attract and retain capital include policy consistency, infrastructure availability, economic stability, etc.
2. While Africa hosts a number of conferences every year to convene and showcase investment opportunities to prospective investors, we must go beyond these presentations and publicity around signing deals at these events. Eventually, these deals do not work because the right reforms have not yet been implemented in many of our countries. We must make our countries work first before many of these deals can truly take off.
3. While I am not in the public-sector space, as a private sector player, there are two strategies I abide by: First is the ability to articulate great plans, but more importantly is ensuring that I execute these plans. Beyond policy consistency, and even the richness and robustness of our domestic policies – which would do well to attract capital, – we must imbibe the discipline of execution, to see through things to completion. Our public ministries, agencies and governments must build and hone this capacity of execution.
4. ‘Private sector and public sector are not in competition’. These two sectors must maintain a highly collaborative partnership where governments consistently develop policies that would encourage the private sector to invest. Where we have an active private sector, we would be able to deal with most of the issues and challenges that even government on a daily basis strives to address. For instance, government on its own cannot provide employment for all citizens. Government needs to facilitate economic agents and actors that will help to create employment, and that is the private sector.
5. While it is common knowledge that the private sector/SMEs is the main driver of employment in any economy, why therefore is it that many SMEs in Africa don’t do well? They don’t do well not because our young people are not intelligent, enthusiastic to succeed, and energetic, not because they don’t work hard, but because the operating environment is stifling. Mass transportation, access to reliable electricity, and government bureaucracy remain obstacles in the way of success. We cannot persuade private capital to invest in local opportunities if these conditions are not fixed.
6. It is also important that our SMEs and private sector flourish because they signal to foreign investors whether or not a country is truly business-friendly and whether or not capital is truly safe in a region. If they don’t succeed, the economy doesn’t make progress and if they succeed, they would attract massive investment into the continent. When we have these success stories, we must showcase these buckets of successes in Africa to encourage others to bring capital to Africa to invest.
7. I often say that the most critical sector for economic transformation in any country is power. Any country that is serious about development works on its Power sector first. But in cases where private players who invest in this sector are burnt, then this dissuades others from investing their capital. Other investors are watching keenly. There is no amount of investment ratio and analysis that an administration can do to encourage prospective investors to come in when local investors have been burnt.
8. There is nothing that attracts investments more than success. Foreign investors NEED to see that local investors are succeeding, as they succeed others would come in. In the past, I know a telecommunications company that came to Nigeria to invest, they came to the country, they were burnt, the investor community punished them for coming to invest in Nigeria but as they succeeded many other global telecommunications companies rushed into Nigeria.
9. Our local corporates must be willing to invest in building the capacity to partner with foreign investors when they do come into the continent to invest. In the 21st century, only investments can power our continent to prosperity this is #Africapitalism. The new African narrative must be one of investment and trade, not aid and handout.
10. In conclusion, our governments must work in sincerity to improve the operating environment for private sector and SMEs. We must prioritise the success of SMEs and give them economic opportunity, and hope. As we showcase their success, we will attract even more private sector investment from across Africa and abroad. In Africa, where you have massive unemployment, the success of one person or one company is nothing, we must think holistically.
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