There is a global buzz about the
economic boom in Africa. Economic analysts talk about 6% growth. Even for some
few countries like Ethiopia and Nigeria, double-digit growth is projected in
the years to come. But the question is, are the likely big gainers going to be
Africans themselves or foreign investors? That is the one million dollar
question.
Many African entrepreneurs and governments are on the full glare of the growth opportunities that there is in the continent. Many have already begun to take advantage by founding new innovative companies that are already on success path. Indeed, some African governments are even encouraging investment in neighboring countries where opportunities are stronger. In Kenya for instance, you will find South African firms in the media and entertainment industry or Libyan Oil companies so ubiquitous one will think it is the ideal industry to invest in.
Nonetheless, it will be disingenuous not to recognize the growing interest of young innovative entrepreneurially tactful Africans eager to take advantage of the new economic dawn in the continent. Although, by and large, the continent was not prepared for this growth in terms of infrastructure and managerial skills, lots of young Africans are yet boldly and conspicuously embracing these opportunities. Many business schools are now on the rush to accommodate people seeking management and technological skills that are currently sub-optimal. However, besides the managerial and technical needs, the other big challenge for the African entrepreneur is the capital investment required to take off. Local banks are obviously still lurking in risk managing the loan opportunities and are quite frankly still latching on the past where prohibitive interest rates are swaying capital seekers to find other alternatives.
Unfortunately, these alternatives come with significant dichotomous short-term and long-term cost to the African entrepreneur seeking capital for either start-up or for strategic market expansion. On the one hand, Billions of dollars in foreign private equities are flooding the market scouting for investment opportunities. From the outset, this is great because with direct investment there is job creation and other activities that spur economic growth.
On the flip-side, to start a business local entrepreneurs require capital. Private equities hardly provide direct borrowing opportunities typically seen in the banks. Most are interested in existing ventures - very few show interest in start-ups. Generally, Foreign Investors find some comfort and security in buying out or partnering in established ventures - tested and proven. This approach eliminates both the founding entrepreneur and the risk involved with starting a new business. To the founding entrepreneur, the short-term benefit is to dispose the business at relatively good cash not considering real success is indeed the long-term. Those are investors often from the West and Middle East.
on the other hand, there are the Chinese whose investment and business approach is diametrically opposed to the conventional ways. Their targeted investments are massive public and semi-private contracts. Contrary to western investors, they import both intangible and tangible products and skills, technology and capital and only turn Africa into behemoth consumer with negligible socially responsible corporate deliveries - with absolutely nothing green on their investment menu. By green investment in this context, we refer to conscious awakening to both sustainability and socially responsible investments. Yet corruption abounds in their dealings.
From Large private and public infrastructural contracts to small retailers, the Chinese are so ubiquitous across Africa. In Kenya for instance, after the Anglo-Leasing and the Goldenberg scandals, the Chinese are the new kids on the block when it comes to towering corrupt mega deals. In a nutshell, the Chinese investment is of no value to the mainstream African entrepreneur. They are beneficiaries unto themselves and their home country. Foreign Private equities and other form of non-Chinese foreign investors are engaged in full ownership that in the long-term eliminates local ownership ultimately leaving behind little benefit. It then begs the question, who is truly benefiting from this economic buzz in the continent?
Many African entrepreneurs and governments are on the full glare of the growth opportunities that there is in the continent. Many have already begun to take advantage by founding new innovative companies that are already on success path. Indeed, some African governments are even encouraging investment in neighboring countries where opportunities are stronger. In Kenya for instance, you will find South African firms in the media and entertainment industry or Libyan Oil companies so ubiquitous one will think it is the ideal industry to invest in.
Nonetheless, it will be disingenuous not to recognize the growing interest of young innovative entrepreneurially tactful Africans eager to take advantage of the new economic dawn in the continent. Although, by and large, the continent was not prepared for this growth in terms of infrastructure and managerial skills, lots of young Africans are yet boldly and conspicuously embracing these opportunities. Many business schools are now on the rush to accommodate people seeking management and technological skills that are currently sub-optimal. However, besides the managerial and technical needs, the other big challenge for the African entrepreneur is the capital investment required to take off. Local banks are obviously still lurking in risk managing the loan opportunities and are quite frankly still latching on the past where prohibitive interest rates are swaying capital seekers to find other alternatives.
Unfortunately, these alternatives come with significant dichotomous short-term and long-term cost to the African entrepreneur seeking capital for either start-up or for strategic market expansion. On the one hand, Billions of dollars in foreign private equities are flooding the market scouting for investment opportunities. From the outset, this is great because with direct investment there is job creation and other activities that spur economic growth.
On the flip-side, to start a business local entrepreneurs require capital. Private equities hardly provide direct borrowing opportunities typically seen in the banks. Most are interested in existing ventures - very few show interest in start-ups. Generally, Foreign Investors find some comfort and security in buying out or partnering in established ventures - tested and proven. This approach eliminates both the founding entrepreneur and the risk involved with starting a new business. To the founding entrepreneur, the short-term benefit is to dispose the business at relatively good cash not considering real success is indeed the long-term. Those are investors often from the West and Middle East.
on the other hand, there are the Chinese whose investment and business approach is diametrically opposed to the conventional ways. Their targeted investments are massive public and semi-private contracts. Contrary to western investors, they import both intangible and tangible products and skills, technology and capital and only turn Africa into behemoth consumer with negligible socially responsible corporate deliveries - with absolutely nothing green on their investment menu. By green investment in this context, we refer to conscious awakening to both sustainability and socially responsible investments. Yet corruption abounds in their dealings.
From Large private and public infrastructural contracts to small retailers, the Chinese are so ubiquitous across Africa. In Kenya for instance, after the Anglo-Leasing and the Goldenberg scandals, the Chinese are the new kids on the block when it comes to towering corrupt mega deals. In a nutshell, the Chinese investment is of no value to the mainstream African entrepreneur. They are beneficiaries unto themselves and their home country. Foreign Private equities and other form of non-Chinese foreign investors are engaged in full ownership that in the long-term eliminates local ownership ultimately leaving behind little benefit. It then begs the question, who is truly benefiting from this economic buzz in the continent?
