Per Talking Biz News last week, the Wall Street Journal recently listed an opening for a business reporter in Africa, describing the position as “the most entrepreneurial of beats.” The ad was intriguing for two salient reasons:
- The ad is for a business reporter in Africa, yet the description clarifies that the beat would be “Silicon Savannah” in Nairobi, Kenya. (Suppose the WSJ ran an ad for a “business reporter in Europe”?)
- Is the investment/business climate in Africa truly accelerating?
With 54 African countries, it was a bold move to infer that a reporter covering the startup scene in the 11th largest economy was covering “Africa,” but the gist of the posting – that the beat is ripe for growth — fits a popular narrative of a burgeoning business climate in Africa.
Generally speaking, and while cautiously optimistic, many economists, academics, and others versed in international finance agree that the African continent—with significantly more democratically elected governments and fewer violent conflicts than the 1990s — is poised for growth.
But…
Some experts aren’t so rosy in their predictions, mainly due to a lack of infrastructure on the continent. According to an article in The Economist, “Thandika Mkandawire, a Malawi-born expert, and Dani Rodrik, a Princeton economist, argue that growth is bound to fizzle because of a dearth of factories.” But regarding the raw potential, Forbes contributor Farai Gundan wrote:
“The population is projected to grow to 2 billion by 2050 and will soon have the largest workforce according to the Harvard Business Review. Additionally, Africa has a USD $2 trillion economy with about a third of its 54 countries garnering annual GDP growths of more than six percent. Of the top ten fastest growing economies in the world, six are in Africa and rich in natural resources, 60% of the world’s uncultivated arable land is in Africa.”
Potential isn’t enough
In an article for Brookings examining Kenya specifically, Mwangi S. Kiemyi, a senior fellow at the Africa Global Initiative, and Josephine Kibe, a guest scholar, wrote:
“Donald Kaberuka, the president of the African Development Bank offered some cautionary words. While the good economic news from the continent may well represent a turning point from a past characterized by hopelessness, he said, Africa nevertheless remains far from a tipping point. To reach such a threshold, Africa requires major investments in three “I’s”: institutions, integration, and infrastructure.”
And to all the Negative Nancies…
“Africa’s risks are mainly perceived and not real”, according to Aliko Dangote, who is widely considered to be Africa’s richest businessman.
Echoing this sentiment in an interview with the International Business Times, Ashish Thakkar, a founding member of the Mara Group, relayed that the 54 different countries in Africa each present different challenges and investment capabilities. The largest barriers to business lie with the fact that venture capital funds have yet to take off like they have in the United States. However, Thakkar sees potential for technology and financial services once the framework for raising financial capital is developed similar to the booming VC industry in the U.S. circa the early 1970s.
But as Dangote elaborates, “Unfortunately for us in Africa we are not really very good at telling our own story. But things are changing and people are beginning to understand that things are going very, very well.”
Unique challenges aside, it seems likely that Africa will continue to present intriguing options for investors and inevitably command a larger portion of business journalism in the near future. Best of luck to the reporter who lands the gig, and looking forward to more coverage of the business climate in Africa.
Bill C. Smith (@BillCSmith87) is a senior account executive at Dukas Public Relations in New York.
