‘Africa wants industrialisation not extraction’

Africa now has a voice over what foreign investments it needs. This emerged at the US- Africa Business Summit in Addis Ababa this week, where African Union Commission chairwoman Nkosazana Dlamini-Zuma and Ethiopian Prime Minister Hailemariam Desalegn spoke.

By Coletta N Wanjohi


“America is probably the biggest investor in Africa, but why have we not changed the lives of ordinary people?” Dlamini-Zuma asked a delegation of American Business community in Ethiopia, seeking investment in Africa.

“Most of the investments are in extractives, sometimes they don’t even touch the land. They come from the sea and out, and that is not going to deal with poverty on our continent,” she said.

Desalegn also highlighted the need for American businesses to look at the productive sectors that may help individual African countries to industrialise. Ethiopia, for instance, has limited sectors that it has invited the Americans to invest in.

“Our priority sectors open for investment include light manufacturing in terms of textiles and apparel, leather and leather products, sugar, metal and industrial engineering and pharmaceutical industries,” explained Desalegn.

According to the World Bank, Africa is the second most attractive investment destination after North America.

And Dlamini-Zuma says that with over 1 billion people, human resource is assured and with it plenty of untapped natural resources, the economic benefits that any well planned investor can get from the continent cannot be understated.

She emphasizes that Africa wants more, it wants industrialisation as opposed to export of raw materials, so that its population can get employment.

The World Bank says that with rising production costs in Asia, manufacturers have been looking at countries such as Ethiopia, Kenya and Rwanda. Today, China, Turkey and India are the top three job creators in Africa’s manufacturing sector. China specifically has moved to challenge the economic status quo that the United States of America enjoyed for decades.

“China is a factor that awakens greater interest in Africa,” explains the president of Corporate Council on Africa, Stephen Hayes.

According to the World Bank, Chinese Foreign Direct investment to Africa rose to $3.5 billion in 2013, and nearly all African countries are benefiting from China’s participation today.

The fact that China has helped Africa build much needed infrastructure, and industries hence opening up job opportunities, seems to have increased Africa’s bargaining power.

One of America’s flagship projects in the continent is the Power Africa project whose aim is to bring electricity to some African countries. However, African countries like Ethiopia are building their own power projects using their own funds.

Ethiopia is constructing the Great Renaissance dam which will have 6000MW capacity. It will be the largest in Africa and the 6th largest globally.

Uganda announced that it will build its Karuma dam with the help of China.

Intra Africa co-operation is increasing self dependence in Africa. Upon completion Ethiopia has announced that it plans to sell electricity to Kenya, Sudan and Djibouti.

Desalegn says regional co-operation is opening up space for regional development. “We are already connected to Djibouti and Sudan, by power transmission lines, and other links are planned or under construction, to link up with Kenya and beyond the East Africa power pool,” explained Desalegn.

Some experts believe the launch of the Brics bank by Brazil, Russia, India, China and South Africa will limit Africa’s trade relationship with the United States since the continent will have an alternative funding for its projects to the World Bank and the International Monetary Fund.

Linda Thomas Greenfiled, the US Assistant secretary of state for African affairs, however, highlights that corruption is a challenge Africa must overcome.

“When companies approach governments and opportunities are presented to governments, you have people inside those governments fighting those opportunities because it gets in the way of their own private interests,” she says.

She adds that lack of skilled labour, stability and fair and efficient regulatory frameworks are also requirements for Africa to work on if it is to attract more investments from the US.

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