With its boundless natural resources, Africa is the richest continent in the world. But no country has gotten rich by exporting raw materials, which is one of the reasons why Africa remains the poorest continent in the world.
Because most African countries export raw goods, a drop in world commodity prices can devastate incomes for an entire season. African farmers receive pennies for their crops, while other countries process those crops, add value, and make a fortune selling the final products. UN Secretary General Ban Ki-moon was absolutely right last year when he said that investing in value addition is “essential” to Africa’s economic development.
Now, investors are realizing that Africa is the next big place to do business and are investing in value-adding projects like Cargill’s cocoa processing plant in Ghana and the Gates Foundation’s grant to develop cashew processors in Benin, Burkina Faso, Côte d’Ivoire, Ghana and Mozambique. These initiatives return the full value of final goods to Africans and create jobs at home instead of sending them overseas.
Value-added investment is one of the keys to Africa’s potential as a player in the global economy, and building Africa’s wealth for Africans.
Right on. This is the reason that funds like the Africa Middle Market Fund are appearing: to direct expansion capital to entrepreneurs working at the highest leverage points along the value chain in many basic industries. First, this is done to better facilitate Africans serving Africans, supplying their own markets and getting full local benefit of the multiplier effect when local commerce grows. Opportunities abound as the expanding middle class develops real consumer power – what Professor Vijay Mahajan terms “Africa Two” in his terific book, Africa Rising.
The challenge remains to convince investors that African mid-size companies are an investment-grade asset class in their own right. They sure are, but the marketing required in this economic environment is fairly prodigious. Please keep it up, Rosa and Co.!
Very nice blog. I totally agree with your thoughts.
Pingback: Investment in Ghana: Capitalizing on Our Opportunities : The Whitaker Group