Leading Edge interviews Ms. Florizelle Liser, the President and CEO of the Corporate Council on Africa
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The Corporate Council on Africa will celebrate its 25th anniversary in 2018. What would you consider the main milestones in this 25 years period?
The Corporate Council on Africa over its 25-year history has grown to be the leading business association focused solely on connecting business interests in Africa. It has done this by forming programs which have created tangible growth and opportunity on the continent and paved the way for U.S. businesses to invest and create long-term partnerships with African businesses and economies. This has been possible because of the access, connections and insight that CCA provides due to its continuous involvement on the continent. Programs like the South Africa International Business Linkage Program (SAIBL) which created more than 25,000 jobs in South Africa as well as lobbying for PEPFAR through the formation of the Coalition for AIDS Relief in Africa (CARA). In 2009, CCA began the “Doing Business in…” series in which African countries worked with CCA to organize events highlighting why businesses should invest in their respective countries. This service has been used by more than 25 countries. CCA has continued this legacy of leading the way in facilitating investment in Africa with our historic U.S. – Sudan Trade Mission this past December.
Foreign Investment in Africa declined by 3% in 2016, but it is expected to improve in 2017. What would you consider the main impediments against Africa maintaining a positive flow of investment?
The main impediments against Africa maintaining a positive flow of investment largely relates to the “doing business” environment and to the business and investment policies and regulations that can either facilitate or hinder investment flows. Issues such as transparency, corruption, and rule of law can also impact inward investment flows. Other issues that impact investment flows are related to the limited markets for large scale investments in many African countries, some with GDPs of just a few billion dollars each year, combined with supply side constraints including high transportation costs and the limited supply of a technologically skilled workforce, all of which contribute to investors’ perceptions of the African market and investment “risks”. Notwithstanding real as well as perceived impediments, rates of return on investment (ROI) remain high in Africa, and companies from around the world (including the United States, China, Europe, Japan, Brazil, and India) are competing to trade with and invest in the large and growing African market.
57% of total foreign investment in Africa is focused in five countries: Ethiopia, Ghana, Angola, Nigeria and Egypt. The drop in commodity prices in recent years has had a negative impact on the investment in other countries. Do you foresee a recovery in commodity prices in the short term, hence a resuming investment flow to the continent as a whole?
Commodity prices by nature fluctuate, following a natural cycle of ups and downs. As a result, African countries have been working to insulate themselves through mechanisms such as commodity futures markets from the volatility of markets. To do this, they are investing in the entire supply chain. For example, Ghana and Cote D’Ivoire through the Abijan Declaration have created excellent supply chains for the cocoa sector to maintain high production levels for cocoa. They are following an example similar to that of Botswana and the diamond market. Certain African countries are also attracting investment into other value-added products such as apparel and leather footwear, and this trend is expected to grow as investment in manufacturing in certain sectors shifts from China to the African continent.
It is noticeable that a country like Ethiopia is seeing a big increase in investment in the area of manufacturing. Do you think that investing in manufacturing in Africa can offer the same returns for investors as in the oil and raw material sectors?
The type of investment required for oil and gas is different from that needed for manufacturing, and the returns on investments are also different. As Africa looks to have the highest employable population in the global workforce, it will need to ensure that it develops the appropriate skillsets over the next 40 to 50 years that will be the necessary man-power to grow manufacturing as we have seen happen in China and East Asia. With Africa’s access to inputs and abundant, cheap labour, investors in manufacturing will earn returns on investment comparable to or better than those in manufacturing in other regions of the world – especially as Africa increases manufacturing productivity and reduces transportation and other costs. Investors in manufacturing can also rely on local demand as Africa’s growing middle class increase their purchases of fast-moving consumer goods which account for a large part of the growth of the manufacturing sector. The manufacturing sector will create both jobs and customers for its products. Businesses and countries should be investing in training the workforce as it will be the driver of success in African manufacturing.
Despite the importance of Chinese Investment, Western Economies still take the bulk of Foreign Investment in Africa. Are US companies paying greater attention to the trade and investment opportunities available on the continent? And how is the Council contributing to this?
With Africa being the second fastest growing region globally and accounting for 6 of the 10 fastest growing economies in the world, many U.S. companies – both multinationals as well as small and medium sized enterprises (SMEs) – are invested in a range of sectors in Africa. U.S. companies already invested in Africa and others seeking to trade with and invest in Africa recognize the significant opportunities on the continent and are focused on Africa’s most promising sectors including agribusiness, energy, finance, health, ICT, infrastructure, security, tourism, and trade. They know that investing in Africa is about being involved for the long term and that long-term involvement will produce great dividends (Africa boasts some of the highest rates of return on investment of any region in the world).
CCA facilitates investment into Africa by serving as a neutral, trusted intermediary connecting its member firms with the essential government and business leaders they need to do business and succeed in Africa. Through sector- and country-specific working groups, high-level special events, business conferences, and trade missions, CCA works to improve Africa’s trade and investment climate and to raise the profile of Africa in the U.S. business community.
Back in 2013, several top African businessmen joined the board of the Council, namely Aliko Dangote, Tony Elemelu and Jacob Mabuza. In fact, increasingly the private sector is taking a leading role in fostering economic growth on the continent. What programs is the Council putting in place to increase entrepreneurship in Africa?
CCA has always recognized the important role the private sector -both here in the U.S. and in Africa – play in fostering economic growth and supporting mutually beneficial commercial partnerships. CCA is committed to championing business and trade between the U.S. and Africa, and we work closely with governments, multilateral groups and businesses to foster greater entrepreneurship and help promote those partnerships.
We mentioned the noticeable investment in manufacturing in Ethiopia as a sign of non-traditional sectors starting to attract investment. Which other sectors do you see with potential?
In manufacturing, sectors such as value-added agriculture/agribusiness is an important one that supports Africa’s significant agricultural base as well as creating jobs. Services, in fact, contribute more to African GDP than manufacturing, and there’s notable growth in financial, telecom/IT, distribution, professional, and health services. Other areas that have some really interesting opportunities are water management to address issues such as the low water tables in South Africa, bio-supplies using drones, medical e-records and mobile services, livestock herds specifically investment in slaughter facilities, as well as biofuels to help diversify energy sources. To fully realize the potential of any of these sectors there must be proper management of the supply chain and appropriate government oversight. Policy makers need to review regulations and ensure there is an attractive environment for long term investors and those looking to create jobs.
Skilling Africa is a program already established in several African countries with the aim of improving the skills of the labour force thus giving their economies a competitive advantage when it comes to attract investors. Is the CCA contributing to this effort?
CCA is focused on capacity building and workforce development as an issue that is important to many of our members whose businesses and their growth in Africa depend on having a skilled workforce.
Your tenure as Head of the Council has just started. How do you expect to facilitate the goals of the Council in the short and medium term?
I’ve now been at CCA a little over a year, and it has been an exciting and productive one. During 2017, we have grown our membership, held a successful U.S.-Africa Business Summit, hosted the World Tourism Conference and the AGOA Private Sector Forum, organized high level meetings with African Heads of State and CEOs on the sidelines of UNGA, led a historic trade mission to Sudan, and held numerous working group meetings focused on CCA’s core areas of focus including agribusiness, energy, finance, health, ICT, infrastructure, security, tourism, and trade. My vision for CCA is that we will continue to be the foremost organization focused solely on U.S.-Africa business, and providing access, connections and insight for our members and other U.S.-Africa trade and investment stakeholders.
