The Eastern Africa Diaspora Business Council (EADBC) East Africa Trade Mission is planned for November 25th to December 3rd, 2016. The Mission will include a stop-over in Dar es Salaam, Tanzania, to attend the EAC Heads of State meeting as well as deliberations with the EABC before proceeding, Zanzibar, Arusha and Kigali Rwanda explore unique business and investment opportunities in the region. It will underscore the importance of harnessing the EADBC ingenuity in business and entrepreneurship to push the EAC region into the forefront of global trade and investment. Will it have any impact? Ejike Okpa examines this.
Has any East African country paid East Africa Diaspora Business Council retainer and/or in-country consulting fee for this? I bet no. As usual looking for freebie while hoping to make millions. You get what you pay for, in this case since there is nothing paid for – it has no value.
Africa is neither ready for transformative business agenda nor programs to ignite immediate term sustainability. It is sad that a continent that supplies the world with a third of the raw material needed to run most industries is locked up in primitive ways. Business development ought to lead to TRANSFORMATION and not just TRANSACTIONS.
About EADBC influencing policies favorable to the continent; do the number. No major US corporation traded on NYSC or NASDAQ, will do business in Africa because the East Africa Diaspora Business Council has said it should.
What are the top 10 sectors that East Africa need investors in and what are they willing to place as in EQUITY in order to leverage the opportunities? When the currency of a nation is devalued, when the skill set to run corporations lacks and local interest rates are choking businesses, it’s hard to foster growth and development to expand the economy. Why can’t Tanzania build its roads, power and infrastructure using its local currency as opposed to borrowing? Why can’t the East African countries create a common currency regime, trade more among themselves and lower interest rate to single digits? Rwanda has FTA, how come many East African countries are not latching onto the Agreement via regional trade cooperation to enhance exports from the region to US? Instead, Taiwanese and Chinese business people are setting up plants in Rwanda to take advantage of the Agreement, while Africans are interested in being FRONTS for token fees. Why?
There are certain relationships that are not collateral for business development. There is nothing a Mayor of Dallas or City Council member can do for business development in Africa or some of the government officials Africans embrace thinking they are key in opening business development. The Ambassadors and their counterparts are not key as many of them never really owned business and as such are not disposed to push the right buttons. I am yet to find an African country that can point to a business deal in billions because an Ambassador championed the move. The various countries have no defined goals as to what they want from US.
The resources of African diplomatic missions in US is the least significant in lobbying the ‘Beltway Gang’ to effect positive policy towards Africa. Altogether, the 54 odd African nations with embassies in DC, spend less than $50m annually in lobbying US for effective business policies to warrant added attention and audience.
Mexico and Canada alone spend hundreds of millions to lobby US on trade related issues. The same goes for Asia. But with Africa, they come begging while strong-arming their nations. In economics, money attracts itself while in science the opposite attracts.
Place a dollar on the table and another dollar will find a way to attach. Since many African nations’ economies are controlled by the government, it makes it harder to foster the sort of economic and business development most US businesses and corporations can relate to. That is why Africa nations look for TRANSACTIONS – mining and export goods, but in FIRE – finance-insurance-real estate sectors, the market is near bare.
Throw in the judicial condition: many US businesses are scared of doing business in Africa for fear of dispute and its resolution. These issues are at the back of their mind when looking at markets to engage. US businesses know of these things and for the big ones, their corporate board will hardly approve engagement except for sure things. And sure things, will not come from East African Diaspora Business Council but from the President and/or Prime Minister.
In Africa, whatever anyone brings is celebrated, the continent has become a play and dumping grounds for all sorts of goods and persons. Until the soil is prepared for planting, no amount of fertilizer will lead to bountiful harvest. Africa has not prepared for good planting but looks for bountiful harvest. Therefore, the transactions are not transforming the continent. While Africa is Rising – many countries in sub-Sahara, have no water and wastewater systems, and a country is seen not to have anything if they do not have this infrastructure. This infrastructure must be financed by local resources or it will never happen. The World Bank cannot do it for Africa.
For example in the 70s through part of the 80s, when the Naira was stronger than the Dollar, many companies relocated to Nigeria and with it came needed skills set. But once the west saw that Nigeria was not prepared for the growth, they deployed the mechanics of currency devaluation tricking Nigeria to rely on exports and single commodity economy impressing them they need robust foreign reserve accounts in order to survive.
Foreign Reserve Accounts is like one using CD – Certificate of Deposit as collateral to borrow when there is limited creditworthiness.
Africa cannot emerge relying on export of raw materials and piling up on foreign reserves. How come US and UK, two deficit budgeting nations are among G-7, while the commodity dependent nations are starving and struggling? The answer is hidden in the Six Functions of Money, which is made effective with policy and legislative agenda – creation of financial instruments enabled by legislation.
One does not need trade mission to do business in Africa, as anything one can take into the continent will sell. What Africa lacks is effectiveness in deploying policies that ensure/secure their growth and development.
Africa needs to step aside from having more than 50+ different currencies whose exchange rates are nightmare to understand. The interest rate on borrowed money is choking and often preference is given to foreign banks operating in the continent over domestic ones. Harmonization of interest rate on borrowed money achieved via weighted average of countries the African nation wants to do business will help to strengthen the local currency so that expansive growth and development can be sustained. The problem is within the continent and not because there is no interest to do business. United Airlines has pulled plug flying to Nigeria because of severe foreign exchange fluctuation which has wiped out gains. Why would any corporation risk that?
If AU will have balls and impress on ECOWAS, EAC, SADC to move towards single currency regimes, and do so within 3-5 years, that will lead to far better impact than seeking small cap foreign investments. In the case of Nigeria, if the Naira can be strengthened to where its value bounces to pre-1998 rate, the economy will gain more than 300% boost without additional pumping of oil. If the exchange rate gets to its mid-80s level, many Nigerians with the skill set will relocate and along will come other foreigners.
It is all about the MONEY and not so much who likes and or loves Africa. The Middle East is doing relatively well as single commodity economies because their exchange rate to the Dollar is favorable and given its small populations, they can afford to be single commodity economy. But with Nigeria 170m folks, realizing less than $50b in sell of oil/gas annually, it will need other sectors to kick in huge amounts. Yes, Nigeria is a major oil producer but it’s the POOREST of all oil producing nations given its per capita income.
Why do TRADE MISSION; use the MONEY ship a car to Africa and get returns that blows the mind. But again, it is mere and pure TRANSACTION. Africans love TRANSACTIONS, it did not start today – reason SLAVE TRADE lasted as long as it did – TRANSACTION.
By Ejike E. Okpa II