In the mist of endless sunshine, fresh produce, and glowing brown faces, I spent much of my four-month stay in sub-Saharan Africa exploring the many opportunities I saw to make money.
Contrary to the perception of Africa as a perpetual messûtoo poor, politically corrupt, and AIDS-ridden to offer economic opportunityû many African nations are experiencing the best economic growth in years.
According to a 2007 report by the U.S. Department of Commerce, sub-Saharan African countries grew by 5.3 percent, a number higher than the world average. “At this rate, Africa’s poverty rate could halve by 2015.
Take India and China out of the equation, and sub-Saharan Africa is actually growing faster than Asia,” SeekingAlpha.com, a provider of stock market opinion and analysis, reported.
While the West virtually ignores Africaûcurrently, only 1 percent of the private capital in the world is invested in sub-Saharan AfricaûChina has aggressively increased its presence on the continent. In 2006, trade between China and Africa soared by 40 percent to a record $55.5 billion, according to SeekingAlpha.com.
In her cozy home in Johannesburg, South Africa, I spoke with Monica Faith Stewart, a Chicago native and former Illinois state senator who is now the Managing Director of the State of Illinois Africa Office of Trade and Investment. Stewart first came to South Africa in 1994 as an international observer for the country’s first democratic election.
Nelson Mandela was among the candidates for South Africa’s presidency. “One of the most important experiences I had was being involved in Harold Washington’s election. There were lots of parallels with Nelson Mandela. When I came [to South Africa] it was the same ‘keep hope alive’ kind of sensation. It was overwhelming to look as far as I could seeûBlack people lined up to vote.
The chance to be in a real transition, I couldn’t pass up,” said Stewart. After Mandela’s election Stewart returned to South Africa. She kept her foot in both worlds, lobbying South Africa’s Parliament on behalf of Chicago-based clients. In 2000, Stewart became Managing Director of the Africa branch of the revitalized Illinois Office of Trade and Investment. Originally established in 1965, the OTI helps Illinois companies identify new markets and locate distribution channels for their products and services abroad.
Today, the OTI has 10 foreign offices across the globe. Multi-national companies based in Ilinois such as Abbott Labs, John Deere, Caterpillar, Motorola, and Boeing, help make the state the sixth largest exporting one in the nation. In 2007, the OTI reported Illinois exports to Africa totaled $846 million, an increase of 46 percent from 2005.
Top sectors include machinery, chemicals, computer and electronic products, transportation equipment, fabricated metal components, and food and kindred products, the agency reported. “For most American companies, South Africa represents the gateway to Africa. It offers comfortable and familiar infrastructure and banking systems,” Stewart said. South Africa now accounts for 67 percent of economic activity between Illinois and Africa, according to OTI.
Although American corporate presence is slowly increasing in Africa, Black-owned companies don’t have strong representation. For Stewart, change begins with a visit. “People often can’t believe what they’re seeing,” Stewart said of the frequent visitors she receives. “Americans are notoriously ignorant about Africa.
But like Africa suffers terribly from negative perception, we suffer from negative self-conception tied to our ideas about where we come from.” Stewart exclaims, “If African Americans were a separate nation we’d have nearly the same purchasing power as the entire African continent. It is important for the sons and daughters of Africa to come home and make a contribution. African Americans have a lot to offer.
And, there is satisfaction in demonstrating a connection between African Americans and Africa.” For companies interested in doing business in Africa, Stewart suggests first researching the markets. “Get on the Internet and learn about this market. There are opportunities and you get a higher return.” Stewart’s assertion is supported by MoneyWeek.com.
The Web site indicates that Africa currently offers the highest returns on foreign and direct investment of any region in the world. And African companies are some of the most profitable and fastest growing, according to the site. For small and medium sized businesses, Stewart recommends finding a local partner. “If business people think they have a marketable product or service, find a joint venture partner in the new market.
There is a wealth of opportunities for Black contractors selling building materials, engineers, and in communications technology.” Partnering with a Black Economic Empowerment company may enhance chances of obtaining large contracts and finance. According to BEE regulations, businesses must have a set percentage of previously disadvantaged people (Black South Africans) in management, shareholding and partnerships.
Much like affirmative action in the United States, South Africa organizations must comply with BEE regulations to qualify for several economic incentives or obtain government contracts. In addition, South Africa offers attractive incentives geared toward foreigners who want to invest or open a business in South Africa.
The African nation’s Department of Trade and Industry offers non-tax grants in the form of below average interest rates on business loans, utility allowances for larger companies, tax deductions, and allowances for initial setup or relocation costs. Stewart also suggested looking to South Africa for career opportunities. “There is a real need for technical skills-in agriculture, engineering, industrial and environmental fields,” she said.
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