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3 keys for trade and innovation in Africa

Posted by Chad O'Connor  July 11, 2013 11:00 AM

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It is no longer a secret that several of the most attractive markets for trade and investment are in Africa.

The World Bank's Africa's Pulse blog reports that 25 percent of the countries in Africa grew at 7% or more in 2012, among the fastest growth rates growth rates in the world. Trade between Africa and the rest of the world has increased 200% since 2000. The proportion of people living in extreme poverty fell from 56% in 1990 to 47% in 2008 according the the 2012 Millennium Development Report. While average incomes are still low, several countries are seeing the emergence of a middle class which is impacting African societies on many fronts. For the first time, investments in consumer-facing ventures have become viable.

Decision makers in Africa have made a deliberate pivot away from aid dependence towards an emphasis on trade and investment with each other and the rest of the world. Trade and investment are seen as tools for development and the means to address urgent needs for improved infrastructure, housing, and healthcare.

Infrastructure. The key to increasing incomes and reducing poverty is increasing the productivity of African workers and farmers, and improving the competitiveness of African companies. Improvements in infrastructure will accomplish these objectives. Improvement is needed in virtually all areas of infrastructure, from roads to air and sea ports to railways to telecommunications. One example of innovation leading to infrastructure upgrade is the explosion in mobile communication. In addition to putting a phone in a lot more hands, mobile telephony has enabled significant advancement in fields such as financial services, agribusiness, and healthcare. Much of the innovation has been homegrown and African entrepreneurs have come up with solutions to fit their circumstances that we could learn from. At the same time, a lot of the ideas heard at a typical Mobile Monday could be adapted to an African context.

Housing. Rapid population growth and a burgeoning middle class create housing shortages of up to 1,000,000 units in many countries in sub-Saharan Africa. Investors and developers from abroad who partner with local landowners and developers would be welcome, especially if they target the affordable housing segment. The most sought after partners bring a little something extra, such as green building technologies adapted to the local environment, and will train African workers in the new methods.

Healthcare/Life Sciences. Advanced manufactured items such as medical instruments and devices are much in demand. Health care and life sciences companies can supply equipment such as medical devices and laboratory equipment. In many cases deals in this sector will have social impact as well as a commercial component. For this reason, universities and non-profits play a role in fostering exchange of goods and knowledge with their African counterparts. An example is Seeding Labs, a Boston non-profit that arranges donations of lab equipment to African universities. Seeding Labs also brings African scientists to Boston to work with some of our major life sciences firms. US-made equipment is appreciated for its quality and is competitive against lower priced Asian competitors. African companies and entrepreneurs look for investors and joint venture partners for various projects including drug manufacturing and mobile health apps among other ventures.

We are well positioned to partner with Africa in trade and innovation. Our academic community, our innovation economy, and our substantial African immigrant communities are strengths we can build on. The next step, with the help of in-country advisors and experts closer to home, is to develop an Africa strategy. The time is right for companies engage with Africa for our mutual benefit.

Darnley Howard is president of Advansa International, a consulting firm that assists companies and entrepreneurs doing business in Africa and other emerging markets. Additional insights can be found at Darnley's blog

This blog is not written or edited by or the Boston Globe.
The author is solely responsible for the content.

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