Understand African economies – Erwin
If potential Italian investors want to succeed in Africa they need to gain understanding of its economies from the economies themselves – not from analysts in New York.
Former minister of trade and industry Alec Erwin, now chairman of UBU Investment Holdings, said this in speaking at a South Africa-Italy summit yesterday about relations between the two countries in the present economic scenario.
“If you’re going to be serious about Africa, be serious about Africa, don’t take it for granted. Get in and understand these economies, do your homework,” Erwin said.
While the institutional environment on the continent was not always easy, it was manageable.
However, foreign investors who went in with the idea that African countries had to be investor-friendly and do everything the foreign investor wanted would be “sorely disappointed”.
Erwin also warned against investors wanting to find short cuts to doing business in Africa.
“The temptation is great to find the minister to take you to the top and give you your licence.
“You can do it, but don’t cry two years later when it all goes wrong because the minister is no longer the minister.”
There were African business people who preferred to do things correctly in terms of best practice, while others were like fireflies who were there for a few years and then gone.
Erwin said South Africa needed trade and had been unsuccessful breaking into central Europe.
Italy was potentially a serious trade partner and had remarkable similarities.
Italy’s Vice-Minister of Foreign Affairs, Lapo Pistelli, told delegates they should heed this advice.
“It is not about hit and run.”
Delegates heard that the investment potential in Africa was enormous.
Energy demand in the region would increase by 107 percent by 2040, with investments of more than $50 billion (R564bn) a year.
The middle-class population in sub-Saharan Africa was growing and would exceed that of India, with an aggregate spending of more than $2 trillion by 2030.
Food demand would grow at an average annual rate of 3 percent and the agribusiness sector would be worth $1 trillion by 2030.
There were more than 200 million hectares of uncultivated land on the continent, equal to about half of that available worldwide.
In an interview, Pistelli said he “totally agreed” with the remarks Erwin had made.
Investors needed to look not only at profits, but at partnerships.
“It must be about long-term strategies, not short cuts. If you follow that, you are a success. Short cuts lead to failure.”
Italy had a lot of fears in dealing with the African institutional model and needed to deal with these, Pistelli said.
Asked his view of foreign investors representing another “scramble for Africa” wave to the detriment of countries on the continent, Pistelli said: “Some big actors in the world could be tempted to play that game, but it’s not the way of Italy.
“The temptation of a short-term scramble is not the Italian model.”