Why has Africa not attracted more interest from the U.S. business community

A recently released study conducted by the Africa Business Initiative of the US Chamber of Commerce and Baird CMC ask “Why has Africa not attracted more interest from the U.S. business community?”

Rule of law — The rule of law does not prevail to the degree required to make Africa an attractive investment destination. This applies to corporate, societal, and criminal law

Attraction — While the enormous natural resources are an attraction, Africa does not offer a sufficiently large middle class of consumers or show consistent economic growth that could promise a future market. Most African countries are small and have poor markets, and there are barriers to regional markets–such as taxes and the freedom of movement of people and goods

Risks versus rewards– Given the currently perceived risks in Africa, the rewards have to be very high to make it worthwhile to invest. Presently, U.S. corporations say that there are very few visible promises of future returns high enough to justify significant interest in investing

Supportive business framework–Transportation and communications infrastructure, trained or trainable human resources, and equitable trade and employment practices are insufficient to support corporate investment

A welcoming environment– African countries are not doing a sufficient job of providing education and health services to the potential workforce, which makes the potential hire-able local insufficient to support investment.

I think to view Africa as a unified continent is probably a misnomer, in the same way that to view Asia or North America as a unified business environment.

Additionally, the problems with rule of law and infrastructure present opportunities for a) the development of small scale enterprises (in a world of globalization with outsourcing, mobile, and the internet the world is increasingly flat) b) to solve those problems for locals and multinationals c) creating business with the more stable business environment.

Particularly in the mobile space, use is taking off and driving communication, commerce, and local economies. In a globalized world the communications infrastructure is ultimately the lynchpin for driving health care, education, and other community endeavors.