Rt Hon Lord Paul Boateng is a leading figure on Africa’s development and a member of the UK House of Lords. Here he talks with Leading Edge about trade and investment opportunities available on the continent…


According to the African Investment Report 2016, Foreign Investment in Africa declined during 2015, and 24% of the projects undertaken were still in the extractive industries. Will you qualify for us, if you think Africa is going through a transition from commodity – oriented investment towards more structural investment?

The global down turn saw a reversion to type – namely to see Africa primarily as a source of commodities and raw materials, and I think the international community rather lost its nerve in relation to Africa. So although the good news around structural and regulatory reform and governance continued, with an increasing number of African countries being listed as places which are actually good to business in, FDI into Africa in emerging areas suffered.

I do not believe that will continue to be the case. The reality is that capital is always looking for places to make returns. Africa, demographically is on the up, in terms of a growing middle class and there is an increasingly well equipped pool of labour at a relatively low cost. There is a technocratic leadership now across Africa, (not just in terms of the individual African states increasingly), but also in terms of the African Union, NEPAD, COMESA, The African Development Bank, and The UN Economic Commission for Africa, this is pushing Africa as a business investment destination and I do not see that letting up, particularly given the link with the wider African diaspora.

You go to New York, Paris or London, you go to China – you will find an African diaspora community which is very much part of ‘selling Africa’ into those markets, so there is a greater comfort zone.

Which sectors do you think will see the greatest return for international investors then?

The obvious ones are the sectors which cater specifically to a growing middle class, so – education and healthcare and then luxury goods such as alcohol and fashion. That is the first tier and I expect that to be the case. Then there is what I call the second tier, which is the infrastructure – not just transport, (although it is significant that President Akufo -Addo appointed a minister for railways development and chose to appoint a distinguished and reforming minister of justice and attorney general for that role) But also the infrastructure in relation to ICT.

The third tier is Africa’s agricultural potential, which is grossly under realised and so there are real market opportunities, hence AfDB’s focus on agriculture and agri- related industry. The middle class want more by way of food products and so we cannot continue to rely on importing food from overseas. I think there will be an opportunity to literally feed the appetite of the growing middle class by developing agri- business and agri processing.

A classic example of that is Kenya and coffee. I have been going to Nairobi for the past 30 years. Nairobi now has become the sort of Seattle of coffee from Africa with not just roasting and growing but also the whole coffee culture and it is quite interesting now, African parents who always wanted their children to become Barristers will now find their children will want to become Baristas! There are coffee entrepreneurs in Kenya and they are young.

The report released during the Africa Green Revolution Forum in Nairobi indicates that the gap for entrepreneurs in need of funding is between $1.25 million dollars and $1.50 million dollars to take their agribusiness to the next level of growth. What are the main issues at the base of the limited agribusiness growth in Africa?

The big issue is risk. Banks are notoriously conservative when it comes to agriculture, they don’t feel confident when it comes to evaluating agricultural products. They don’t feel they have the risk management skills and so they don’t make money available. That is where the Africa Enterprise Challenge Fund comes in and we meet the .25-1.5 million market on the basis of soft loans and grants. But when people want much less or a lot more there is an issue. When CDC’s (The Commonwealth Development Corporation) new strategy envisages that they will have a higher profile in the agri sector they’re looking at a level of 15,20,25 million and more, so what about the gap between what the AECF does and what the likes of CDC do? and though there are impact funds and private equity funds out there, there is certainly huge space for investment. What we have to do and what the AfDB would like to do is de-risk Agriculture in the hope that the market will serve it better, as the potential is obvious.

Do you think Africa’s “blank canvas” in terms of penetration of Technology – for example in ICT, or the implementation of technology in agriculture gives it an advantage for both the nation states, their people and international investors as well?

I do, and in agri processing, and in renewable, the fact of the matter is, it will never be possible to bring all of Africa onto the grid, so off grid is here to stay, so the potential there whether it is bio fuel, solar or wind is enormous.

In February 2017, you were nominated Chairman of The Planet Earth Institute, which supports the “emancipation” of African science and advocate high-quality, industry-relevant science that addresses the continent’s developmental challenges. What role can Science, Technology and innovation have in Africa for achieving sustainable growth?

I was brought up in the Western part of Africa, and there is an Akan saying “ if you come late to the kitchen, you don’t have to break as many pots,” which means that it is possible for Africa to leap frog because Africa is coming late to some of this. You are seeing this with the M-Pesa experience, the fact is that in terms of access to financial services M-Pesa has been the most enormous home grown success, money transfer through mobile phones has been the most incredible African led, African idea using African technology that has prospered in the African market, so it has not been and will not be necessary (if we are smart) for Africa to go through the teething pains that other more developed economies have been through.

The two biggest African economies – Nigeria and South Africa – have had a difficult time, in recent years. However other smaller economies, like Ivory Coast, Tanzania and Senegal are growing steadily. What are in your opinion the reasons behind the significant growth of these economies?

I think there has been a degree of focus and intentionality in relation to some of the smaller economies – Botswana and Rwanda are stand outs for me in that regard in terms of their governance and Senegal too is a good example of very focused leadership. The president of Rwanda has been at the forefront of seeking to make Rwanda the best place in Africa to do business, with the whole concept of one stop shops, the speed of setting up a business, the agri -sector and interconnectivity, it has been very very focused.

Similarly the way that Botswana has handled the diamond industry and benefaction there and the way they have handled agriculture. Senegal is there with education, science and technology. As well as of course the speed of the recovery after the civil war in Cote d’Ivoire has been quite remarkable.

Ghana too is another very good example, but I would never underestimate the internal dynamism of a country like Nigeria. The size of the market and the dynamism of their entrepreneurial activity, the depth and breadth of that entrepreneurial activity, make Nigeria despite all its issues, make Nigeria a very exciting place.

Over the course of your illustrious career, you have overcome many hurdles: you were one of the first black MPs in 1987, then the first black Cabinet Minister in 2002 (appointed as Chief Secretary to the Treasury) and the first black High-Commissioner to South Africa in 2005. How relevant do you think inequality in Africa is today, and how can international companies invest in Africa as a partner for growth?

Inequality globally is the real issue. One of the standouts of the latter part of the 20th century and the beginning of the 21st is the realisation that it is possible to have growth and reduction in poverty alongside growing equality.

I was Chief Secretary to the Treasury to the UK at a time when we reduced child poverty, introduced the minimum wage and at a time when inequality increased, so if you look at that example from the UK and translate that experience into emerging market economies it is very clear that you can have dynamic economies with high rates of growth yet still face growing inequality hence the importance of maximising the numbers in sustainable worthwhile employment

Trickle down economics does not work. You will see in Africa the phenomenon, even where the growth is not led by commodities, of inequality and economies s at the same time. The particular pull of the population to urban centres out of rural centres exacerbates the divide.

Where multinationals provide sustainable jobs and contribute through their own activity to increasing capacity, they can make a very positive contribution. It does mean they will need to address their own supply chains in ways that enhance the creation of sustainable livelihoods.

There are a number of good examples – Diageo, Unilever, SAB Miller who quite actively seek to utilise local sourcing.

Similarly the increasing awareness on the part of African governments of the need to require foreign direct investment and government contracts to be accompanied by local content – all of that has made and can make a difference, will there need to be more of it? Yes, unless we are prepared to tolerate the social disruption that will occur if we do not broaden the base of employment and opportunity.

That social disruption does not only occur within Africa but it occurs externally as people vote with their feet, the fact is that when you look at people waiting to get on rafts in Libya, they are not all fleeing war, many are actually seeking economic opportunity, that they felt they could not find at home. Many are bright and able people of education, graduates and people of means who have paid a lot of money to these wicked human traffickers. Indeed it is a very complicated picture and that is why I think that is why we will see a greater role on the part of ODA on job creation, and it is also why if you take a country like Ghana, the political parties will now vie with each other to create jobs, the question is however just how sustainable will they be.

It is an important change that has occurred in Africa – now increasingly, the genuinely democratic dispensation means that political parties have to earn the support of the electorate through a focus on job creation. Nana Akufo -Addo won in Ghana not only by addressing failures in infrastructure but also with the promise of jobs and a factory in every district. It is clear there is going to be a much greater focus on this important issue, which will help reduce inequality.

The Planet Earth Institute (PEI) is launching the ​PEI exchange platform during the Science Africa UN Conference on 20 July​, 2017 in London. It’s the first online matching platform for all individuals working and interested in Africa. You declared: “The latest digital technologies are a powerful way of fostering collaboration among the many talented individuals working to further sustainable and inclusive development in Africa. “ How important can these connecting tools and platforms be in order to change the approach of the international business community to the African market?

The PEI exchange is the first digital matching platform to be dedicated to African development, which enables you to find and become part of a community of interest around a particular business project or piece of research or activity in a particular geographical area in real time. If two people befriend each other they can chat and share findings and trace the progress of a project live.

We have a big ideas map of Africa which shows where specific ideas are being formed, it has been likened to me by younger people as a sort of academic online dating app, in the sense that you put in your profile and that will match with someone else who is also interested in bio-fuels in Rwanda or developing a solar project in Mali. It is a very cutting edge phenomenon, and it is all in the cloud so it is lean and mean and very effective and shall be launched on the 20th of August.

You recently declared: “Africa should not be seen just as a case for philanthropy, but as a place of huge business opportunity”. What can be done to promote an idea of Africa not as and aid receiver but as a place where to go and start a profitable and sustainable business? And how do you think the continent suffers from misconception?

We need to get real about Africa – what is Africa? It is a collection of very different countries and regions, with different characteristics. They do have certain things in common however – with huge biodiversity and mineral wealth and across the continent the most youthful population in the world with the biggest growing middle class in the world, but within that – real difference. There is this tendency to generalise. Ebola breaks out in Sierra Leone and people stop travelling to Nairobi, or a football team gets hijacked on the borders of on the borders of Angola and the DRC
and it has implication for the participation of African teams in global competitions.

It does not make any sense, but that is the perception of Africa as somehow this sort of dark continent, that of Stanley and Livingstone and this sense of exoticism and danger which is routed in an imperial and ethno-centric history. So part of what we have to do is to tell the whole story, which is a story of wealth, of riches and of diversity and of unrealised potential, but also a story which does contain issues which have to be confronted, around governance and around corruption. Though in my experience, they are being confronted, and if you inform yourself about what is happening in Africa, then you will learn that the trends are going the right way.

Good governance is up in Africa, conflict in Africa is down. You take a country like Somaliland which is unrecognised internationally some of the best returns on investments we have in the African Enterprise Challenge Fund, come from there. Or look at the Eastern D.R.C. which you know in 2013/2014 was coming out of a civil war, and which still experiences unacceptable level of conflict and unrest; we have examples from the African Enterprise Challenge Fund of very successful businesses in the cocoa sector in the D.R.C.

It is not about seeing Africa through rose tinted spectacles but it is about seeing Africa clearly through spectacles that are not fogged by the miasma of colonialism and ethnic domination.Seen in this way Africa is not a “suitable case for treatment or a basket case for global philanthropy ” but rather a source of varied and exciting opportunity.