The hesitation among businesses to invest in Africa despite growing potential on the continent received attention in a series discussions held during Tuck School of Business' Africa Highlight Week, which took place Feb. 20-23 and was dedicated to discussing corporate economic policy in Africa. The series of events was created largely to foster interest in African investments, according to Maureen Sarewitz Tu '12, co-chair of the Tuck Africa Club. The event was the first of its kind to discuss economic policy in Africa at Tuck, according to Sarewitz.
On Monday, panelists discussed the relationship between corporate profitability and social impact on the African continent. Tuck students who have lived and worked in Africa shared their experiences during a reception later in the week.
"We thought the emergence of Africa as a key player in the global economy was an important issue to address given the widespread underinvestment in the continent," co-chair Farai Mahoya Tu '12 said.
During "Doing Good While Doing Well: The Business of Profits and Social Impact in Africa," panelists addressed the dual challenge businesses face of generating profit and producing a positive social impact on local residents.
Africa has a vast supply of valuable natural resources, a feature that appeals to corporate interests. However, many businesses are reluctant to invest in the continent due to high rates of poverty and low standards of living, according to Guy Pfefferman, founder and CEO of the Global Business School Network and moderator of Monday's panel.
Efforts to invest in the continent should stress the importance of state involvement in business ventures, according to Dennis Hanno, dean of the undergraduate school at Babson College, who said partnerships between governments and private sectors can help alleviate poverty.
In countries like Rwanda that face massive social disruptions such as genocide, the government is a crucial asset in drawing emigrants back to the country. The state is needed to create a climate that favors social well-being and is appealing to investors so that "economic development will lead to things that will create a better society down the road," Hanno said.
Esi Nana Sekyiamah, deputy program manager at TechnoServe, Inc., said she witnessed real progress in reducing farmers' poverty through the efforts of TechnoServe, which focuses on Swaziland's cotton and livestock industries.
Synergy between business, government, small entrepreneurial operations and large aid efforts can often be a difficult process, however, according to Pfefferman.
Dykstra agreed that all of the different actors trying to address a similar cause make for discord, and it takes time and energy to develop effective cooperation strategies.
"Once you get alignment, though, you find that collaboration allows achievement beyond what one entity could do on its own," he said.
Responding to a student inquiry about business' obligations to improve social conditions, Hanno said he has witnessed "two extremes" of corporate interests in Africa thus far great care for employees due to personal belief that they should be valued for their work and a robber-baron ideal to make profits at the expense of employee welfare.
Lack of state regulation allows the latter to occur sometimes, but providing unemployed Africans with work generally has a positive social impact, Hanno said.
Hanno said he has always been impressed with the sense of national pride held by entrepreneurs in African businesses. Rather than speaking of their personal gains, many also note the gains experienced by their countries as successes, he said.
It is positive business ventures such as these that will hopefully inspire more businesses to form on the continent, Dykstra said.
"I am very hopeful that people will see there is actual opportunity in Africa and that companies will move to invest there," he said.
The discussion generated a positive response from students, though attendee Sankalp Malhotra Tu '13 said he was "surprised" that the panelists spoke so little about governments, which he considers "one of the key issues."
On Wednesday, other panelists discussed the causes of corporate hesitation and their roles in marketing in Africa.
Ahmed Hassan, head of marketing in Africa and the Middle East for Colgate-Palmolive, Co., said Colgate-Palmolive all of whose product categories are represented on the African continent has experienced rapid growth in sales in Africa during the last 10 years. Rapid economic growth and a growing middle class motivate his and other companies to market goods in Africa, he said.
"I am happy to work in places that are witnessing very strong, double-digit growth," Hassan said, "This is really the base of consumers and will make up the business base going forward."
With a general growth in wealth comes a populace with greater spending power, Risana Zitha '99, a managing director in Morgan Stanley's Johannesburg office, said. Recently, there has been a general move away from considering Africa only as a supplier of natural resources, according to Zitha.
Africans, especially the younger generations, are becoming true buyers in the world market, creating an appealing environment for multinational corporations, he said.
"I think our discussion of the growing middle class and the power of the average consumer is a real point to take away," Hassan said in an interview with The Dartmouth. "If there is a bigger consumer base, investment is justified because the reward or return on investment is larger and faster."
DuPont, a science-based products company, has become heavily involved in sales to food-related businesses operating on the African continent, Edward Baiden, global marketing director for the Packaging Graphics unit at DuPont chemical company, said.
"When people move from destitution to better income, the first thing that happens is changes in diet," Baiden said.
Despite the growth in favorable economic conditions, businesses encounter difficulties when looking to invest in Africa. Several countries are very appealing to foreign investors, but corruption and other factors make franchise and investment unfavorable, Zitha said.
"People are starting to realize the potential that exists, but managing the franchise risk will be the biggest challenge," he said.
Agreeing that these potential risks sometimes dissuade companies, Hassan said Colgate-Palmolive operated in Nigeria for some time before ceasing operation due to pitfalls such as corruption.
In order to fuel investment, governments are becoming increasingly likely to ask for support from the private sector, according to Baiden. DuPont, for example, has received requests to assist government officials in determining how to develop agricultural production.
"We work with them on creating policy and how to open up the possibility for progress," he said.
Many of the discussions about social and economic issues took general perspectives, and audience member Alicia Bajwa Tu '12 said she hoped the panelists would address "more about certain country-specific solutions," given fundamental differences in political and social structures.
Africa Highlight Week was presented by the Center for International Business and Tuck Africa Club. Mahoya, Ose Oteze Tu '12 and Sarewitz organized the event series.
