By: Tim M. Solso, Cummins Inc & N. Justin Chinyanta, Loita Group
'.......Today, Africa is the new frontier, ripe for foreign investment.
Africa is booming – in part because African governments are heeding the call to action, removing barriers to trade, lowering taxes and improving the physical and social infrastructure that had impeded business growth. Africa’s collective GDP, at $1.6 trillion in 2008, is roughly equal to that of Brazil or Russia, and the rate of return on foreign investment in Africa now is higher than in any other developing region.
Despite all of these changes, and a proven ROI, most American investors are still missing out on a major opportunity for growth that would in turn create jobs and opportunity for millions of Africans. Local knowledge has been critical to Cummins Inc new approach for investing in Africa, allowing the company to expand in a way that supports the communities in which it does business. This is the aim of the Initiative for Global Development’s Frontier 100 group, of which we are both members, which connects CEOs like us from the United States and Africa to learn how best to maximize Africa’s potential.
To be sure, Africa is a continent, not a country, and there are hurdles to overcome in certain countries before sustainable business development and poverty reduction can happen. But the tremendous growth in foreign direct investment and track record of robust economic growth is clear evidence that the continent’s leaders are making progress – and shows investors looking for the next emerging market what could be possible.
What made enterprise growth in China and India work then – the only way to make it work in Africa now – is a long term view, and a plan to nurture not only the business, but the communities in which business is being done. A corporation and its employees are only as healthy as the communities in which they operate.