The size of the African continent, the potential of its inhabitants and the extent of its needs in the 21st century were all highlighted at the opening of the Discover Global Markets Sub-Saharan African Business Forum in Atlanta Nov. 5.
U.S. Commerce Secretary Penny Pritzker included the zinger that by 2040 “…Africa will boast a larger workforce than either India or China” during her luncheon comments held at the Atlanta Marriott Buckhead Hotel and Conference Center.
An estimated 400 attendees participated Wednesday, the first day of the two-day forum, some coming from as far as Botswana and South Africa.
Georgia’s U.S. Senator Johnny Isakson, a ranking member on the Senate Committee for International Trade, and Andrew Young, former mayor, U.S. representative and ambassador to the United Nations, attended the luncheon as did officials from several African countries and a host of U.S. commercial officers.
While the secretary’s purpose was to underscore the opportunities for U.S. companies to conduct trade with and invest in Africa, she immediately dealt with the concerns about the Ebola virus having just met with officials from the Centers for Disease Control and Prevention, which at the moment has 200 of its employees trying to contain the disease in West Africa.
“With the mid-term elections now over, our country has to get back to focusing on facts, not fears or rumors,” she said of the virus which had become a political issue in some campaigns.
First, she remarked that Ebola was limited to three countries in West Africa — Liberia, Guinea and Sierra Leone — with a population of 21 million in contrast to the continent as a whole composed of 54 countries with a population of 1.1 billion.
She cited the response in Liberia to the virus of the U.S. tire manufacturer Firestone, which has had operations in that country since 1926 and currently operates a rubber farm that covers 185 square miles.
Seventy-eight cases of Ebola, she said, have been detected on the farm that employs 8,000 workers.
“The farm is a real community. And while they have seen 78 cases of Ebola, the company has provided the resources to tackle the immediate health challenge,” she said, referring to the 450 teachers in Firestone schools that have been raising awareness about preventive measures to guard against the virus.
As part of the administration’s Doing Business in Africa initiative, Ms. Pritzger visited Africa recently during which she went to the Meltwater Entrepreneurial School of Technology in Accra, Ghana.
“…the continent is full of young entrepreneurs aspiring to build the next Facebook or Google,” she said and referred to the Young African Leaders Intiative, a government program that has brought some of the continent’s most talented youth to the U.S.
At the Meltwater school, she met a group of entrepreneurs who were creating video games based on African folk heroes, developing payment processing technologies for the local online market and addressing the need for a skilled workforce with online matching tools.
“The men and women at Meltwarer demonstrate the type of creativity and innovation you might find in the Silicon Valley or in Austin, Texas, or right here in Atlanta at Georgia Tech,” she added.
She also pointed to the activities of Duluth-based AGCO, which manufactures and exports agricultural equipment and has opened a $35 million parts warehouse in Johannesburg, South Africa.
In addition, she said that AGCO has opened a Global Learning Center and Future Farm in Zambia, which trains local farmers and dealers in modern farming technology.
AGCO is not alone on her list of companies that have invested in Africa. She also mentioned Marriott International Inc., GE and the Coca-Cola Co. that have made more than $14 billion worth of investments throughout the continent.
Praising the success of her department’s U.S.-Africa Business Forum held in Washington in August that attracted 51 heads of state, she said that in the following three months, U.S. companies have made 150 sales in Africa worth nearly $240 million.
“Now is the time to capitalize on this momentum,” she added.
Her comments were well received at the luncheon but in the plenary and a few breakout sessions, questions concerning the risks involved in investing in Africa dominated.
During a morning plenary, the opportunities were recognized but questions arose about the difficulties faced by small- to medium-sized companies in doing business on the continent.
Elikem Nutifafa Kuenyehia, a Ghanian attorney and managing partner at the Oxford & Beaumont law firm, which is based in Accra, Ghana, and has an office in London, said that he felt that American companies often overemphasized risk. “There is an analysis paralysis,” he said. “You have to be practical. The risk in Africa is more perceived than real.”
He repeatedly advised that potential investors put “boots on the ground” and form partnerships with local companies. But he did not deny that pitfalls abounded, referring specifically to property titles.
He added that the lack of legal infrastructures with an inadequate number of judges and processes for redressing claims are a continuing concern.
Michael Burke, a partner in the Washington office of the Atlanta-based law firm Arnall Golden Gregory LLP, also was positive about the opportunities but said that it was important to work with firms that had access to local counsel.
He stressed the need to comply with U.S. regulations, especially export controls which if violated are severely punished in the U.S.
He also warned that a company couldn’t expect its trademarks, patents or copyrights would be protected automatically.
Karel Daele, a partner in the international arbitration section of the Mishcon de Reya law firm that has offices in New York and London, apologized for “spoiling the party,” but added that “I’ve seen what can happen.”
Mr. Daele moved to Tanzania eight years ago abandoning a prestigious London-based firm to go to Africa. At that time, he said, he was warned not to go by many in the profession. Now every major law firm has an African office, he said.
In preparation for his talk, he said he identified 14 risks of doing business in Africa and 16 measures for mitigating the risks.
“If you can’t stand the heat, stay out of the kitchen,” he advised pointing to the many countries in Africa that rank as the most notorious on the corruption perception indexes.
“There are countries doing well and those not doing so well,” he said. “You have to have the right risk profile and the right advisers on the ground and back home.”
South Africa, Nigeria and Ghana had established legal markets, he added. But elsewhere, investors with legal issues can expect delays and uncertain outcomes.
He warned that cases should stay out of local courts and that the best way to resolve disputes is through arbitration, especially when there are commercial disputes.
For investment disputes, which may involve government stakes, he said there need to be more international treaties. Currently he added the U.S. has only nine such treaties with countries in Africa.