William Flew on Africa

Africa is alive with opportunity and the time to invest is ripe, but huge challenges lie ahead for governments, investors and businessmen.

The message from The Times CEO Summit Africa was that, despite the most favourable investment climate for 20 years, Africa’s old ghosts — corruption, mismanagement and poor policies — were still very much present and could ruin the new banquet driven by India and China’s seemingly insatiable appetite for raw materials.

Peter Mandelson, the former European Trade Commissioner, sounded a note of caution in a key address. He said that Africa’s mutual back-slapping over economic progress — the average rate for growth in the continent this year is 5 per cent — should be seen in context.

“The question we should be asking is: why is it not ten times better? Expectations are lowered for Africa,” he said. He targeted poor policies by governments and protectionism within the continent as areas to be addressed and said that too much growth was based on natural resources, which often proved “to be a curse”.

Aliko Dangote, the Nigerian businessman who according to Forbes is the continent’s wealthiest man, said that corruption remained a significant problem for Africans and foreign investors alike. “Corruption is still the major impediment to economic growth, from small cases of backhanders demanded by officials to institutional corruption from government agencies,” he said. He would not allow his cement lorries to travel the quickest route if it meant leaving the country, as bribes to border guards would make it “far too costly”.

Kofi Bucknor, managing partner at Kingdom Zephyr Africa Management, agreed that there was enormous interest in Africa but said “there’s still a good deal of scepticism from investors as to whether the gains in Africa are sustainable”. This was acting as a brake on much larger inflows of funds. Other speakers emphasised that the days of political instability may be over but they had not yet been replaced with investorfriendly government policies.

Niall FitzGerald, deputy chairman of Thomson Reuters, said: “Although it is improving, there are many areas where it is still extremely difficult to do business on the ground, despite the friendly rhetoric.”

Like Mr Dangote, he highlighted the problem of corruption as one of the main disincentives for Western companies. “It is not something that is the domain only of African governments and businesses but it is a particular issue in Africa and, if you are going to do business there you have to confront it.” He added that many Western groups had declined to tackle the issue head on.