Generations of US citizens have learned to pity Africa. It is mainly seen as a quagmire of famine and genocide, a destination only for a sybaritic safari or a masochistic aid mission.
So here is another way to think of Africa: an economic dynamo. Is it time to prepare for the African tiger economy?
Six of the world’s 10 fastest-growing economies between 2001 and 2010 were in Africa, according to The Economist. The IMF says that between last year and 2015, African countries will account for seven of the top 10 spots.
Africa is not just a place for safaris or humanitarian aid. It is also a place to make money.
Global companies are expanding in Africa; vast deposits of oil, gas and minerals are being discovered; and Goldman Sachs recently issued a report, Africa’s Turn, comparing business opportunities in Africa with those in China in the early 1990s.
I am writing this column in Lesotho, a mountainous kingdom (it was snowing the day I arrived!) in southern Africa, on my annual win-a-trip journey.
The winner this year, Jordan Schermerhorn, an engineering student at Rice University, and I visited garment factories that make clothing for US stores. This country is Africa’s biggest apparel exporter to the US.
One set of factories we visited, belonging to the Nien Hsing Textile Co (年興紡織), a giant Taiwanese corporation, employs 10,000 people in Lesotho, making this its biggest operation in the world. Workers turn out blue jeans for Levi’s and other US companies, and Alan Han (韓佳良), a senior company official, said quality is comparable to that of factories in Asia.
While the US may largely misperceive Africa as a disaster zone, China does get the promise on the continent.
Everywhere you turn in Africa these days there are Chinese businesspeople seeking to invest in raw materials and agriculture, but US businesses seem to be only beginning to wake up to the economic potential here.
Why does that matter? Because trade often benefits a country more than aid. I am a strong supporter of foreign aid, but economic growth and jobs are ultimately the most sustainable way to raise living standards.
The US Congress has badly bungled the picture this year by delaying renewal of a provision of the Africa Growth and Opportunity Act (AGOA).
This promotes trade by providing duty-free access to the US market. It is one of the best aid programs you have never heard of — except that it is not an aid program, but an initiative to help Africa lift itself up and create jobs through exports.
About 300,000 jobs in Africa have been created because of AGOA, according to the Brookings Institution, but, in the last few months, countless Africans have been laid off because of the delay in renewal. US importers do not want to place orders unless they are sure that the provision will be renewed and the clothing can enter duty-free. In Lesotho alone, about 5,000 garment workers have lost their jobs because of this maddening congressional delay.
Granted, African countries themselves have botched trade because of corruption, onerous rules and uncompetitive minimum wages. The minimum wage for garment workers is about US$37 per month in Bangladesh, compared with about US$120 in Lesotho.
Or consider infuriating red tape. In Swaziland, it takes 12 procedures and 56 days to start a company, according to the World Bank’s superb Doing Business report for this year. In Niger, it takes 326 days to build a warehouse. In Senegal, it takes 43 procedures and more than two years to enforce a legal claim.