Light at the end of the tunnel for Africa’s future

By Robert Asketill

(L-R) Ike Duker, Executive Chairman Tullow Ghana Ltd and Group Advisor Africa Business, Aidan Heavey Chief Executive Tullow Oil plc, and Niall Quinn Director of International Development Sunderland AFC attend the launch of 'Invest in Africa' on January 24, 2012 in Accra, Ghana.

All eyes will today be on Cairo where already there are fears of the imposition of an Islamic state and the fear Christians will not have the same right as yesterday. From many sides including the ladies of Egypt we are hearing: “We don’t want speeches or promises, but in the coming period, it is about taking action for the good of us all.” Just a week ago, when the polls were closing in the runoff election, the Supreme Council of the Armed Forces (SCAF) issued constitutional amendments that stripped the president’s office of most of its major powers.

The ruling generals made themselves the final arbiters over the most pressing issues still complicating the transition, such as writing the constitution, legislating, passing the state budget, and granted military police broad powers to detain civilians. The armed forces have been the source of power in Egypt since a military coup in 1952. Since then, it has acquired vast economic interests – giant construction companies, farms, water-bottling facilities and a nationwide chain of gas stations as well as leading government posts. Civilian oversight has been one of the demands of the revolutionary groups and here more than any other argument lies Egypt’s future. The sadness is that today Africa is seen as rich in resources and its young, especially from what we have seen in Alexandria and Cairo, have been kept back by corruption and family powers. Now let us see in the new Egypt if these shackles are going to be cast off in the spirit of the Arab Spring.

Writing in the ‘Times’ of London Aidan Heavey, the founder of Tullow Oil, tells us that when he first invested in Africa in 1986, it was seen as a continent of corruption and conflict. An Economist cover best summed up the view. It showed a map of Africa framing a youth with an assault rifle with the headline “The Hopeless Continent”.

The picture today is very different. As Europe lurches from crisis to crisis and the US recovery stutters, Africa is home to seven of the ten fastest-growing economies. Nor is this a sudden change. More than 70 per cent of Africans live in countries that have grown by more than four per cent a year over the past decade. While a strong demand for Africa’s natural wealth has fuelled this, it is not the whole story. A recent report by the UN’s Economic Commission for Africa and African Union says countries without large oil or mineral resources are sharing the success. A fast-expanding consumer market and manufacturing sector are also major drivers.

According to Standard Bank, 60 million African households have annual incomes greater than $3,000. By 2015, that number is expected to reach 100 million, equating to a middle-class consumer market close to India’s now. With the youngest population on the planet, Africa will also enjoy an extraordinary demographic dividend. Some non-African companies are looking at this progress and taking the plunge but most are not. An Ernst & Young survey shows that current investors in Africa are overwhelmingly positive, but those with no business presence are overwhelmingly negative.

Many potential investors think the risks are much larger than they are or feel they lack the contacts to make it work. We want to remove these obstacles. Through a new initiative, Invest in Africa, Tullow is bringing together major companies with a track record on the continent to challenge misconceptions. We want to demystify the investment process and pool our contacts to connect new investors to local decision-makers and businesses. We aim to show that Africa is open for business by talking about our positive experiences. And this message will not be restricted to the business pages. We have struck a sponsorship deal with Sunderland AFC to carry the words “Invest in Africa” on their shirts from the coming season. As 4.7 billion people watch the Premier League, it is hard to think of a better way of letting people know about Africa’s potential.

We are not, of course, launching this initiative solely out of altruism. As Africa’s economy grows so will returns for new and established businesses such as ours. More investment is clearly the best way to drive Africa’s prosperity. Put simply, it is time to invest in Africa.

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