Ethiopia, Kenya and Ghana all have investment opportunities for the U.S. business community, according to Scott Eisner of the U.S. Chamber of Commerce.
Eisner, who heads the group’s Africa Business Initiative, led a delegation to the three countries in early March. He says the countries all offer market potential for infrastructure investments.
“[Their] returns,” he says, “are exponential, because of market size that has not been exploited like other parts of the world…so I think it’s a much more manageable return of investment. Companies and private equity firms are noticing their [rate of investment] in Asia is not the size it once was, and they can invest in infrastructure, agro-processing [in Africa] and see exponential returns on investment that others might not see.”
Investing in Africa is not new.
He says the Cargill company has opened a major cocoa processing in Ghana. Boeing Aircraft, British Aerospace and Pacific Architects and Engineers Government Services, Inc. are involved in improving airports.
But Eisner says more can be done.
He describes Ghana as a boomtown, thanks to the discovery of oil off its coast in recent years.
Promise in East Africa
Investors are also looking to Kenya, which holds elections next year.
The voting four years ago led to violence and instability. A coalition government, including the top two contenders, has also enacted reforms to promote stability and attract investment.
“There are some legacy issues with 2008 post-election violence and legacy corruption within the political system,” says Eisner. “But they have done a lot over the last couple of years to re-attract investments. You have GM, General Electric and FedEx that are doing very large amounts of business, and they are growing their market share.”
He says Kenya has made progress curbing corruption and introducing political reforms, including a new constitution.
“They recently enacted a new anti-counterfeiting bureau, which we are pressing them to fully fund as a strong enforcement body, and the new constitution has helped to reshape what is available. So there is the sense they are divesting from central power to 47 or so counties…where there will be increased opportunities. So I think they have it on the right track…and we’ll have to wait and see what happens next year with the elections to get a full picture of where the future is for Kenya.”
In Ethiopia, he says, U.S. investors are attracted to low corruption and an attractive investment climate, which includes a potential market of 90 million customers.
“[U.S. firms] are taking a long-term view of the potential of the Ethiopian market from [the top to the bottom of] the supply chain and agribusiness. So [opportunities range] from infrastructure, [like building] roads, to the value added that the companies can provide…all the way up to the top tier of the supply chain, with big horticultural facilities.”
Some foreign companies have leased farm land to raise food for export, though he says American firms are looking “to invest and employ Ethiopians to farm for local consumption and also export to other regions of the world to feed the markets in demand.”
He says in telecommunications in Ethiopia are improving, although he urges the government to open its financial sector to more business opportunities for foreign banks.
Eisner says U.S. companies are reaching out to Ethiopians living overseas.
“Ethiopia’s market potential is great,” he says. “[The country has] a very entrepreneurial population that has spent a lot of time in the U.S. through the Diaspora, and [U.S. companies are] looking at Ethiopians who are American citizens to go back and partner with American firms, knowing there is that potential market there.”
Ethiopia is trying to join the World Trade Organization, which he says helps assure U.S. investors “so that if they have problems that emerge, they have a body to go to.…”
Domestically, the U.S. Chamber of Commerce is working to improve trade with Africa by renewing the authorization of the 15-year-old Africa Growth and Opportunity Act (AGOA).
“We are looking at ‘phase two’ [of the act, focusing on] how to make this a two-way trading system [and] to open African markets to American goods with [U.S. government tools like] the national export initiative [seeking to double U.S. exports in five years]. While there’s nothing pending right now, what we’re looking at is the next three to five years as being a critical time to expand the African market place to U.S. goods and services.”
Many analysts say China is far ahead of the West in offering deals to invest in African infrastructure. But that doesn’t mean U.S. companies have to lag behind. He encourages them to enter partnerships with Asian companies already in Africa and to explore improved financing through the U.S. government-backed OPIC (Overseas Private Investment Corporation) or Ex-Im (Export-Import Bank).