Average economic growth of more than five percent, record flows of foreign direct investment and stock markets that routinely outperform London, New York and Tokyo. This is Africa today.
Readers of the western press would be forgiven for thinking otherwise. No other region of the world is described with such sweeping generalizations as the 54 countries of Africa. As a consequence, bad news from one country tends to tarnish the image of the whole continent.
At times it seems that the world is addicted to Afro-pessimism. Indeed, negative perceptions are so entrenched that the positive stories struggle to be heard. In particular, business in Africa is hardly ever reported. Is it any surprise, then, that there is a widespread perception of the continent as a region in which it is difficult to conduct business?
And yet the reality can be very different. Consider the extraordinary returns being generated on Africa stock exchanges. In 2005, African stock markets outperformed other regional markets for the fourth year in a row, generating on average a 56 percent return in real US dollar terms.
Consider the phenomenal growth of the mobile phone industry – over 1,000 percent in the five-year period between 1998 and 2003. Today there are over 50 million mobile phone users on the continent. Or the rapid expansion of the banking sector – Visa estimates there are currently some 19 million of its credit and debit cards in use across Africa. 10 years ago, there were just 1.5 million.
Increasingly prosperous consumers across the continent are one reason why many consider the prospects for long-term business growth in Africa to be better than any other region of the world.
A thriving business environment is certainly Diageo’s experience of Africa. The company has a long and proud record of investing in Africa. The first recorded exports of Guinness to Africa were to Sierra Leone in 1827; today, almost 200 years later, our brands are enjoyed in over 40 African countries.
In some countries, including Ghana, Nigeria and Kenya, our businesses are listed on the local stock exchanges, generating attractive returns for local shareholders and contributing to dividends for international investors in Diageo plc.
We are proud to say that our businesses in Africa, which together account for over one tenth of Diageo’s global turnover, are a success. We have invested in Africa and will continue to invest in Africa because we know the region is an increasingly vibrant and profitable place to do business.
So long as bad news prevails, however, other potential investors may be deterred from considering seriously the continent’s investment opportunities.
Africa needs greater investment to stimulate growth and beat poverty. Although flows of foreign direct investment to Africa are increasing, they are still only a fraction of the global total - about three percent in 2005. And while five percent growth is commendable by European or North American standards, seven percent growth per year is required to reduce poverty by half in Africa during the next nine years – the target set in the United Nations Millennium Declaration and universally subscribed to by the world’s leaders.
That is why I believe tackling Africa’s "image problem" is one of the greatest challenges facing the continent at the start of the 21st century. It is a challenge that should concern us all because we all have a role to play. As the Commission for Africa recommended, businesses invested in Africa – like our own – can help tackle the negative images by telling their own successful investment stories.
For its part, the international media should take a fresh look at Africa and devote greater resources to communicating its investment potential. I am not going to suggest that Africa hasn’t got its problems, and the press has a clear responsibility to report these. What is required, though, is balance and recognition that entrenched negative stereotypes have damaging consequences for the continent’s ability to attract investment.
Much good work is already being done. In 2004, we established the Diageo Africa Business Reporting Awards to recognize excellence in reporting on Africa’s business environment. We also hoped to raise the profile of this aspect of the continent’s development.
As chair of the panel of judges for these awards, it is clear to me that coverage of business in Africa is improving – in terms of both quality and quantity. This year, we received a record number of entries from Europe, Africa, North America and Australia. This is testimony to Africa's thriving business environment and a growing recognition that there is another African story to be told.
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Improving perceptions of Africa is not a panacea. It is, however, a major step in the right direction and one that deserves commitment from us all, businesses, governments and the media alike.
This article originally appeared in the UN Global Compact Quarterly.
Paul Walsh is the Chief Executive of Diageo plc. He was appointed to this position in September 2000, having previously been Chief Operating Officer. Paul joined GrandMet's brewing division in 1982 and became Finance Director in 1986. He held financial positions with Inter-Continental Hotels and the GrandMet Food sector from 1987 to 1989. He was appointed Division Chief Executive of Pillsbury in 1990, becoming Chief Executive Officer of The Pillsbury Company in 1992. Paul was appointed to the GrandMet board in October 1995 and to the Diageo board in December 1997. Paul is a director of the Scotch Whisky Association and also a non-executive director for the Federal Express Corporation and of Centrica plc. In May 2003, Paul became a governor of Henley Management College.
