African advocates ignore the elephant in the room, says expert
by Annette Birch
Published in the Copenhagen Post on March 27, 2014, http://cphpost.dk/news/african-advocates-ignore-the-elephant-in-the-room-says-expert.9062.html
Dansk Industri (DI) released a report on March 24 claiming that Danish companies could create 7,000 more jobs and earn 8 billion kroner more in revenue from exports to Africa, if companies exported as much to Africa as they do to EU countries.
However, Stig Jensen, an expert on the continent who is the head of the Center for Afrikanske Studier at the University of Copenhagen, said some of the findings sound like wishful thinking.
“I think there are many good opportunities for export to Africa,” he said.
“But we have to watch out that we are not all being Gladstone Gander on this one.”
Africa world leader by 2050
DI predicted in the report that Africa could become the world leader in economic growth over the next 35 years as a result of rapid growth in private consumption, especially among Africa’s middle class – which will account for around one third of a predicted population of two billion in 2050.
This would account for a market of more than 10 trillion kroner.
Jensen found this estimate too optimistic. “I am always critical of predictions as they relate to how you see the situation right now,” said Jensen.
Diverse export market
Today, Danish exports mainly head to the continent’s richest countries: the northern states of Egypt, Algeria and Morocco.
However, DI pointed out that Danish companies could profit from other export markets like Nigeria Ghana, Sierra Leone, the Ivory Coast and Rwanda, especially in the areas of agriculture, food processing and the oil and gas industry.
Keep out of Nigeria
DI pointed out that Danish companies should take advantage of Nigeria, which, with a growth rate of 100 percent a year since 2000, is about to overtake South Africa as the largest African economy.
The Danish government agreed and in January opened a trade office in the capital – while other Western countries, like Sweden and the United States, have told their citizens to stay away.
Jensen shared their scepticism. “It would not be among the top ten countries I would invest in,” Jensen said. “Nigeria is an extremely complex country. It is one of the biggest economic players, but politically it is a very difficult country.”
Not good for business
Jensen explained that crime, corruption and conflicts are some of the problems that can hamper successful exports to Nigeria.
Several countries, like the US, have warned of terrorist attacks, kidnapping and conflicts in the country.
“A country like Nigeria is actually dangerous in contrast to Uganda and CAF, which are much safer,” Jensen said. This is not only because the transportation of products over land is often hindered, but also because businesspeople don’t like to go there.
“It is not good for business if people feel unsafe. Some are robbed and killed,” Jensen said.
However, Africa is not entirely to blame – the Danish state could also adjust its foreign and developmental policy so it better supported private Danish companies, claims DI.
“Danish development aid should to a larger extent than today be spent on projects that take into account both trade and aid and lend support to the companies,” Thomas Bustrup, a manager at DI, said in a press release on March 19.
“The companies can do something Danida cannot – namely create permanent jobs.”
Likewise, Jensen emphasised that Danish companies have to think bigger and network more if they want to export more to Africa.
“In general, Danish companies are too provincial,” Jensen said.
Jensen recommended that Danish companies got to know more about the customs of the specific export countries.
Copenhagen Cleantech Cluster, a network for cleantech businesses that is currently assisting companies that export to African countries like Senegal, believes that greater co-operation is necessary.
Danish companies should work together to provide more comprehensive solutions to the African consumers, it told Politiken.
Africa averaged annual growth of 45 percent from 2000 to 2012.
Last year, Danish exports to Africa amounted to 9.3 billion kroner – just 1.5 percent of total Danish exports.
Danish exports to Africa have grown by only 30 percent in the last five years.