When it comes to emerging economies, China and India have received much of the spotlight. But this past week, African leaders gathered in the nation's capitol to tell their story - one that suggests that, collectively, their countries can surpass the growth potential of much of the rest of the world.
In what has otherwise been a bleak economic time globally, Africa has experienced near 6 percent economic expansion. And that growth has come despite the fact that 600 million people on the continent lack access to electricity, which fuels any economic expansion. But that deficiency is all about to change as multinational corporations from around the world are either actively investing in the region or they are actively discussing that possibility.
"From a business standpoint, this is the time," says General Electric 's Chief Executive Jeff Immelt. "The growth is real. Challenges remain but they can be solved through innovation. To play, you have to show up."
Immelt's comments came at a conference jointly sponsored by GE and the Economist magazine, which brought together several African leaders and U.S. businesses and investors. As for GE, it has vowed to invest $2 billion in the region by 2018 to build out its energy infrastructure - anything from natural gas plants to solar facilities to wind farms, says Immelt, who did not mention coal plants.
Leading off the conference, Immelt said that Africa offers the company its greatest potential, having earned $5.2 billion there in 2013. Meantime, it has won $8.3 billion in orders across the continent in the last year.
Among the commitments that GE has made there include $1 billion in railway and power equipment for Angola. It has also just announced plans to invest in Ghana's power sector, or enough to add 1,000 megawatts of power there over the next six years. Altogether, GE is part of consortium to add at least 5,000 megawatts of new electric generation capacity to various countries on the continent.
While the Europeans have long done business in Africa, the Chinese are now coming there in greater numbers. But the Americans have been cautious. The African leaders who spoke at the conference say that such skepticism is largely outdated - that the picture of the continent as famished and war torn is inaccurate.
Indeed, it is a region committed to open borders, entrepreneurship and government cooperation, leaders emphasized. The thinking is that if the continent could grow at 6 percent over the last 10-15 years without adequate power generation and without modern roads and railways, then it could expand by 10 percent with such contemporary infrastructu"Energy is one of our focuses," says John Dramini Mahama, president of Ghana, at the conference on Monday. "We are positioning Ghana as the energy hub for West Africa."
"There are gaps in infrastructure today," adds K.Y. Amoako, founder and president of the African Center for Economic Transformation. "About 30 countries (of the 54 in Africa) have serious issues" with transportation and power generation. "If we can solve this, we add two percentage points to our gross domestic product."
According to the International Energy Agency, sub-Saharan Africa will require $400 billion by 2035 to modernize its energy foundation. The United States' Power Africa initiative will kick in $7 billion through 2018, with much of that going to expand transmission lines to deliver the newfound electricity. Ethiopia, Ghana, Kenya, Liberia, Nigeria and Tanzania are the initial beneficiaries. Meantime, private partners that include GE are contributing $9 billion through 2018.
To be sure, Africa has been ravaged by civil and border wars. Such conflicts mean that governments are using scarce resources to build armies, not strong societies. It's also a continent damaged by corruption, where some of its leaders have grown wealthy at the expense of the people they govern. The African nations that are advancing are doing so because they have rid themselves of belligerent leadership and opened their markets to private industry.
In those countries dedicated to reform, there is a strong predilection that foreign investment is a necessary component of prosperity. The issues, therefore, are about the methods by which the private sector will operate. The doctrines of nationalism - the notion that all outsiders are colonialists - are minority views now almost everywhere in Africa.
"Obviously there is a problem," says Aliko Dangote, chief executive of the Dangote Group, an African conglomerate. "But most governments have strengthened the institutions to fight corruption. But are you going to wait until it is zero before you invest? If someone ask you for a bribe, report the case and deny them the chance. Tell them to get off your back."
Perceptions count for a lot. But actions taken by Africa's enlightened leaders are making room for private enterprise while mitigating cronyism tied to government controls. As such, the economic results that have exceeded global averages since the Great Recession show no sign of letting up there, which is why GE is betting big on the region's future, and why other multinationals will soon follow.
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