Build it and we might come, especially if you ask nicely and kiss our ring. That is the basic, if unfortunate, message conveyed in “The Conversation Behind Closed Doors”, a study commissioned by the US Chamber of Commerce and undertaken by Baird’s CMS, a PR consultancy, on what corporate America “really” thinks about direct, as opposed to portfolio, investment in Africa.
Baird’s surveyed decision makers from 30 US, mostly Fortune 100, multinationals between January and October last year. If the results were generally depressing –“overall, US businesses do not view Africa as an attractive place to invest” — that may have had something to do with the way the research was framed. According to the executive summary – the full study was not made public — the survey “examined the reasons why US companies hesitate to invest” in the continent.
This was most definitely not a “push” poll designed to shape respondents’ opinions in a positive direction. The general thrust of the results, at least as presented, is that African countries have a lot of work to do to win over American business. “News about Africa is mostly about chaos and unrest. Africa is not active or aggressive enough about attracting investment; the voices of the few countries that are making an effort get lost in the surrounding negative noise.”
American companies come across in the survey — again, as presented – as needy and arrogant. “To attract FDI, corporate America asks African nations to do several things.” The list is long. Invest in the health and education “to create a large pool of skilled and productive human resources.” Build more and better infrastructure. Establish functioning legal systems. Protect intellectual property. Stamp out corruption. Cut red tape. Be stable.
Get all that right, and even then US business may stay away. “Globally, competition for American FDI is high. Countries from all regions showcase their advantages, align their offers to US needs, clamour for attention, and invest in their own countries to attract additional investment. Consequently, US corporations do not lack for investment choices.”
I’m not entirely sure that the US Chamber of Commerce is doing its members a favour by allowing them to be cast as uniquely desirable masters of the universe whose every whim must be catered for. Indeed, the attitude rightly or wrongly conveyed in the way the Chamber and Baird’s have written up the results of their survey may actually cost US companies valuable business in parts of Africa.
Arrogance and weakness often go hand-in-hand. Some might very well interpret the list of US corporate “asks” as conceding a certain feebleness of entrepreneurial spirit. No one questions that the kinds of public investments and reforms sought by American executives are necessary. In many African countries, they are already well underway. The investors who are going to profit from them are the ones who have the nerve to get in early and contribute to the transformation of economies, not the spineless excuse-makers evidenced in the public summary of “Behind Closed Doors”.
I would like to think that the summary is misleading, slapped together in a hurry without sufficient thought. Statements like the one quoted above that “overall, US businesses do not view Africa as an attractive place to invest” are such massive generalisations as to be without value — an empty shorthand that merely reinforces stereotypes and prejudice. Differentiation is needed both between businesses and between African countries.
Happily, Francois Baird, Baird’s co-chairman, has provided a more nuanced take on his firm’s findings than the one published by the Chamber. In a piece posted on ForeignPolicy.com, he unpacks some of the results. “South Africa, Nigeria and Kenya are rated highest for their economic development, while Ghana, South Africa and Tunisia take top honors for their investment climate,” he notes. “South Africa got the highest marks for government attitude, with Ghana, Morocco, Kenya and Nigeria tied in the next highest position. Nigeria, Morocco, Egypt and South Africa saw the highest perceived return on investment.”
Baird puts a more positive spin on the results than the authors of the executive summary. “Our study finds a refreshing realism about Africa amongst serious American investors. They see the picture in full color — with all the opportunities, risks, challenges, and gains the continent presents. African countries, even the most positively regarded ones, must be equally realistic if they are to win over foreign investors. They will have to realize that what they say and, more importantly, what they do matters greatly.”
That last sentence might equally apply to US companies – and those who speak on their behalf – if they hope to compete for a share of Africa’s emerging opportunities. It might be more refreshingly realistic to ask how important American FDI is to African economies these days. The Chinese don’t complain about the lack of infrastructure. They build it.