“What investors are looking for is political stability, infrastructure and talent (human capital).
“Political stability is fundamental to sustainable development in Africa, and over the last 10 years both political and economic indicators demonstrate positive fundamental and irreversible changes,” Dr Peter Karungu, of KNC and Associates, said.
Dr Karungu, an economist originally from Kenya based in Johannesburg, was speaking at the second day of the Intra-Africa Business Symposium in Sandton, Johannesburg on Thursday, 29 October 2009.
“The number of war beset countries in sub-Saharan Africa declined from 13 to four between 1999 and 2005 and there has also been some development of political rights and civil liberties in Africa between 1990 and 2006,” he said.
“People don't give credit for changes but these figures and facts tell the truth, and I don't understand why people still have some doubts to come to invest in Africa.”
He also said Africa's economic growth prospects remain resilient and continue to experience its best period of sustained growth since independence despite slowdown, citing the SA economy as a case study.
“High commodity prices yield windfall profits for the region's leading producers of raw materials, and inflation across the continent has diminished.
“Growing demand for energy, metals, and minerals - particularly in China - has driven unprecedented levels of foreign investment.”
Nevertheless, Dr Karungu lashed out at African governments for not working hard to diversify their economies, and relying too much on commodities.
Reports suggest many African countries' GDP have taken a dramatic knock during the recession as a result of falling commodities prices.
However, despite the growth of certain economies, Dr Karungu regretted that Africa's massive economy growth has not been translated into development, which he explained as the social upliftment of ordinary citizens.
“Take Angola for instance. There has been a tremendous growth since 2002 but many people are still poor and living in awful conditions as the benefits of that growth simply go into the elite's pockets.”
Sixty percent of African people cannot even afford to buy a Panado for headache, he said, adding that this kind of contrast might backfire and create a cycle of violence and crime in society as the have-nots's hearts get filled with envy and jealousy.
“The continent has been doing well, but not well enough to sustain its people and create opportunities for improving the poor's living conditions. If 40% of the people are poor, then democracy is not working,” he said.
Furthermore, many analysts believe Africa's legislative regulations (SADC Protocol, Comersa, and many more) on investment and trade are too complex and make it almost impossible to develop intra-African trade, which currently stands at just over 10%.
Dr Karungu also slammed “the African mentality” of asking people ‘where were you born, which ethnical group are you from or which country are you from', calling it the ‘lowest form of thinking' that needs to be eradicated if Africa is to move forward.
“Please don't ask me where I come from, rather ask me what can I do to help. Because I am Kenyan does not mean I cannot live and invest in Johannesburg.”
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