“Africans must not expect others to invest in what we ourselves, are not ready to invest in. Our capital resources may by limited, but they are not insignificant. We need to mobilize our domestic savings and capital markets to invest in deals on the continent,” – a frank and stirring quote from South Africa’s Minister of Finance, Malusi Gigaba’s address to the Black Business Council breakfast roundtable in Durban.
Africa has been described as a continent that is replete with economic potential but lacking in capital and political stability to develop and transform its enormous potential into tangible gains.
Despite having the needed population to provide manpower to drive production, majority of Africa’s young people are unemployed and underemployed.
Also lacking is the needed infrastructure to support entrepreneurship and ease of doing business.
Today a lot of focus is on diversifying the continent’s economies and attracting more Foreign Direct Investment’s (FDIs) in the production of value added goods.
While a lot of emphasis is being placed on the attraction of foreign investments, it is noteworthy that less significant stakes by Africans in its industrialisation will certainly amount to unsustainable development.
Government must lead the way
The first thing African leaders must do is to create an enabling environment for businesses to grow and thrive, because this is the first factor of consideration when planting a business.
The second thing the government should do is to have a growth and monitoring plan for Micro, Small and Medium Enterprises (MSMEs). African governments must deliberately share in and foster the growth aspirations of MSMEs, which constitute over 70 per cent of the continent’s economy and encourage them to peak at the large enterprise stage.
Thirdly, the government should have a policy programme to link indigenous enterprises with foreign investors, this can only happen seamlessly if the government has fulfilled the two conditions above. Since foreign investors will be thrilled to invest not just in a land of opportunities, but one coupled with enabling environment.
Foreign investors will also readily partner with local businesses that have been vouched for by the government. And the only way the government can vouch for a business is if it has been involved in propelling and monitoring the success and growth of the business, which is the second condition above.
This practice indeed is not novel, as it is common practice by the United States Government. For example just this week, The United States Trade and Development Agency (USTDA) facilitated new business partnerships between US and Kenyan companies to increase access to affordable, reliable electricity in Kenya.
USTDA midwifed a partnership between Kenyan company Xago Africa Limited and Alevo USA Inc. a battery storage technology manufacturer based in North Carolina to develop a utility scale solar photovoltaic power plant with battery storage in Siaya County, Kenya.
The Agency also signed a grant with the Kenya Electricity Generating Company Limited (KenGen) for a study assessing the use of US technology solutions to increase energy efficiency and power production.
KenGen will conduct the study in partnership with US energy equipment manufacturer Langson Energy Inc which is based in Nevada.
Fourthly, government should overhaul the education system to enable schools and institutions train and develop new skill sets to meet the manpower requirement of the fourth industrial revolution.
If this is not prioritised, jobs will not be owned by the locals when and if eventually industrial investments are established locally through FDIs.
It goes without saying that ownership is critical to any form of sustainable development and while it is necessary to depend on external supportive elements in the early stages of development, it is important to become less and less dependent as growth progresses.
In conclusion, the only way that Africa’s limited capital can truly become significant in investments, is when Governments realise that the quest to industrialise the continent begins with leadership and a strong political will to build the economy for posterity – to this end, assets such as entrepreneurs and young school age population must be well primed to deliver projected outcomes.
In the words of Gigaba to the BBC, “We must be bold and creative, and not limit ourselves conceptually from imagining new approaches appropriate for our national circumstances.”