Mozambique: the business view

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This report – the results of a survey conducted on behalf of the Brenthurst Foundation and Business Leadership South Africa. It is one of a series of reports on the investment and business climate in southern African countries, based on input from the private sector.

Malaysia and Affirmative Action

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It is the Malaysian example of affirmative action or “positive discrimination” which is most often referred to because of its generally accepted image of success. However, closer examination reveals that success does not occur by chance and a national or central programme, with clear measurable objectives is a critical requirement; as opposed to vague, undefined aims like ‘transformation of the economy’. Additionally, certain factors like the established tin mining industry and the rubber plantations, along with the discovery of oil, coinciding with the 1973 ‘oil crisis’, made a major contribution to providing momentum to Malaysia’s New Economic Policy (NEP). With these factors providing a stable investment climate, the national programmes to develop the productivity of the agricultural sector, complemented by directed education and a professional work ethic were launched with the primary aim of realising a nominal increase in general personal income – which served to satisfy all sectors of the population. There must be an acceptance that racial friction will not disappear overnight and that satisfaction of the majority’s aspirations must enjoy priority in spite of the inflammatory potential this has on racial discord. A wealthy elite, benefiting from patronage and exploitation of the policies, will emerge and a decisive requirement exists for a clear time limit on the programmes, to mitigate against the inherent discriminatory nature and divisive influence.

Air Hubs: A Checklist for Africa

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Lessons from other countries show that the creation of an air hub is fundamentally dependent on an ‘open skies’ policy. Attracting other airlines to use the hub helps to establish a suite of regional and international connections. Such liberalisation should not be tied to reciprocity. Success is also linked to location, to being first among regional peers to create a hub, and to having both domestic exports and a tourism market. A hub goes hand in hand with the development of local business. Airport income from shops and restaurants is an important earner and helps to keep landing fees low, thereby attracting additional aircraft. The absence of liberalisation is cited as an ongoing impediment to the creation of such a hub in South Africa, where Cape Town (for reasons of altitude) is seen as a natural hub for ongoing connections to Latin America and Johannesburg for Southern Africa.

Lessons from the Colombian floriculture industry for Africa

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Colombia is the second largest exporter of fresh cut flowers in the world and the largest flower exporter to the United States. It has the world’s richest variety of flowers and producers 50 different kinds for international commercial consumption, which generates nearly $1 billion in foreign exchange, provides over 200,000 jobs and is the largest employer of woman in rural Colombia. All this has been achieved in just 40 years. … The case of floriculture in Colombia and the neat combination of features that have contributed to its export success is instructive to both African policy planners in government and practitioners alike. African countries looking to replicate the success in Colombia face some serious challenges, but are generally in a good position to prosper. The challenges they face are mostly associated with investment and product recognition. Large initial investments need to be made. This, as in the case of Colombia, has to come from the outside – most likely from an existing multinational corporation already engaged in the international floriculture business. But this investment will have to be met with appropriate policies and incentives that will ensure certain benefits and perhaps also protect the pioneer in terms of guaranteed appropriation following the initial capital and technological outlay.

HE Paul Kagame Making Aid Work Better

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Rwanda’s President Paul Kagame answers questions based on his presentation earlier this month in the UK on the topic.

In answering the question ‘how can we increase investment to Africa’, HE President Kagame argues for four actions:

Business Principles for a strong Africa

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The post-colonial period in Africa is over. More and more democratic and peaceful, Africa today battles not against colonialism or neo-colonialism, but against exclusion from the global economy, disease and poverty. In contrast to the apocalyptic humanitarianism of most media, Africa is increasingly optimistic about its own future and increasingly serious about business. Fewer and fewer African citizenries are willing to tolerate prolonged deviations from new norms of political freedom and public accountability. More and more African governments understand and embrace their role in reducing the barriers to commerce and investment. They understand that the only sure pathway to prosperity and true political and fiscal independence is a vibrant, tax-paying private sector.

The full benefits of reform have yet to be reaped, in some countries the transition has yet to begin and in many there is still too much belief in bureaucratic and statist modes of governance. But the possibility of a general return to the authoritarian politics and purely statist economics of the first thirty years of independence is increasingly remote.

Africa Beyond Aid II

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In his introduction, Greg Mills set the scene for the second round of ‘Africa beyond Aid’ conference process by describing the two main visions or paradigms of global development current today.

AFRICOM and African Security

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AFRICOM will be most effective where there is a commonality of purpose and a coincidence of interests between the United States and African states. Establishing that sense of shared purpose and mutual interest requires constant high-level dialogue, joint analysis efforts, and frequent recalibration of priorities and programs. In particular it requires frank exchanges about the each side’s core security interests. AFRICOM will not be effective if Africans feel that the ‘true’ U.S. interests have not been disclosed. Nor will it succeed if U.S. attempts to market AFRICOM as a development or security tool result in unfounded expectations. AFRICOM will provide no quick fixes.

Why Some Latin American Economies Grow and Some Don’t

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Latin America’s high growth economies ‘share some common characteristics. These include a basic set of fundamentals that forms the foundation for feasible growth and development. The implementation and timing of these policies and initiatives result in an arguably more heterodox than orthodox approach to economic development. Given the general shortage of savings, investment – and particularly foreign direct investment (FDI) – is key to growth and development. And, in a world where politics and policy count, the growth performers have had leaders that display a visionary approach to economic management and strategy mixed with strong virtues of accountability and responsibility. Political stability (or perceived stability) is an essential prerequisite for FDI and sustainable growth.

China, United States and Africa – An African View

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CHINA’S rising profile in Africa is perhaps the most significant development for the continent since the end of the Cold War. It has sparked new interest in Africa’s economic potential. It has helped to elevate interest about Africa in global affairs, a profile already raised by the continent’s current economic growth spurt and homespun efforts to deal with conflict and institutionalise governance regimes. Finally, China’s involvement has ended European and American complacency that Africa would always belong to their sphere of influence.

Why do Investors Invest? The Rationale of South African Firms in Latin America

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Politics and policy are increasingly becoming key determinants of foreign direct investment (FDI) in the developing world. Nowhere is this more so than in the extraction industry, where technological advancements have enabled multinational corporations to pursue natural resource deposits in the most difficult geographical locations and transport the extracted resources anywhere in the world. Political stability, and favourable economic policies and legislation — not to mention solid institutions — distinguish one resource-rich developing country from another, and will ultimately determine which countries attract FDI and which fail to do so.