African Investment Has Potential to be "California Gold Rush"

Not investing in Africa today is “tantamount to missing out on the California Gold Rush of the 1850s,” said Haskell Ward, keynote speaker at the second annual Chicago Booth Africa Business Symposium sponsored by the Chicago Africa Business Group.

Ward, who is senior vice president of SEACOM, a company that is developing high-capacity fiber optic bandwidth in eastern and southern Africa, and author of African Development Reconsidered: New Perspectives from the Continent, kicked off the April 15 conference at Harper Center by urging business leaders, students, and policy makers to seize the “window of opportunity” in Africa.

A veteran of African development projects who has served as deputy assistant secretary of state, Ward cited several indicators that suggest that Africa’s economic fortunes have changed:

• According to forecasts by The Economist, seven of the world’s 10 fastest-growing economies will be in sub-Saharan Africa during the next decade.
• China’s trade with Africa has soared to more than $1 billion, making it Africa’s leading trade partner. Meanwhile, India’s trade minister predicts its trade with Africa will rise from $10 billion in2005 to $75 billion in 2015.
• Goldman Sachs economist Jim O’Neill—renowned for coining the term BRIC (Brazil, Russia, India, and China) —predicts that by 2050, the 11 largest African economies will reach $13 trillion, making them larger than Brazil or Russia.

Julie Morton, associate dean of Career Services at Booth, reinforced Ward’s optimism about Africa’s economic outlook. In a brief talk preceding Ward’s keynote, Morton said, “Africa is a career destination Booth students are actively exploring.”

Booth has 50 active alumni in Africa, a robust alumni club in Johannesburg, and, Morton noted, the school currently enrolls 18 students from Africa in the Full-Time MBA Program.

While those numbers may not appear to be large, they have grown. Ten years ago, Morton said, Booth sent very few students to Asia for internships and jobs; today, about 10 percent of any given class heads to Asia after graduation. “Booth students are drawn to drawn to opportunity and entrepreneurial environments, and these abound in Africa.”

In May, Morton and Stacey Kole, deputy dean for the Full-Time MBA Program, visited Johannesburg to explore building employer relationships there.

More Government Support Needed

Despite the rosy projections, the United States has done little to facilitate trade and business development in Africa, Ward said.

The election of Barack Obama was viewed throughout Africa as a harbinger of a new era, but little has changed, Ward said, speculating that it’s because the half-Kenyan Obama is caught in a predicament. “If he shows too much interest in Africa, he’ll be criticized for favoritism.”

“The United States has no Africa policy. I repeat. The United States has no coherent Africa policy. Just a patchwork of policies and initiatives fractured across different departments and agencies, many of which are embroiled in turf battles.”

The driver of Africa’s economic growth has not been the United States or Europe, but China, India, Brazil, Russia and the Gulf states, Ward said. “It’s because of these countries have viewed Africa as a trading partner and investment opportunity.”

Ward said that the United States must do more to stimulate investment and trade in sub-Saharan Africa. “We need to move away from the aid-based approach, which has served us little, and we need to have a commercial strategy that unites our disconnected approach.”

The African Growth and Opportunity Act, passed in 2004, gives the president freedom to provide trade preferences for quota- and duty-free entry into the United States for certain goods, but Ward believes it is only a beginning. “It provides a framework, but should be expanded.”

One of the greatest impediments to fostering trade with Africa is a misperception, Ward said. “We don’t know much about Africa, but what we do know is bad.”

“I do not intend to sugarcoat the challenges of doing business in Africa; I have tons of personal experiences there,” he said. But in many cases, the problems with American-African relations stem from cultural misunderstanding. For instance, he advised, one does not begin a business relationship in Africa with the business proposition. “You must begin with the humanity of the experience,” he said.

A former Peace Corps volunteer in Ethiopia who holds a graduate degree in African studies from UCLA, Ward said his cultural knowledge has benefitted him tremendously in his business dealings. “In the US we like to do things our way. That’s a mistake,” he said. “We should never pretend to know more about Africa than the Africans.”

— Josh Schonwald