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Billions In Investment But No Jobs

Published 5 years ago
By Chris Bishop

In Brussels, the airy, elegant, European capital built by King Leopold on riches from the minerals and rubber of the Democratic Republic of Congo, there was a glimmer of hope for Africa.

At the EU-Africa Business Forum, the European Union (EU) threw its weight behind a new push for investment, along with private companies in Europe, into the emerging economies of Africa. It could mean jobs and a new generation of entrepreneurs. The plan is to concentrate the money on dynamic small and medium enterprises, by easing private investment into the continent.

The EU plans to leverage investments in Africa to the tune of €44 billion ($49 billion) – the equivalent to the market cap of Barclays Bank – before the end of 2020; it also plans to reduce risk for foreign investors by putting up €1.5 billion ($1.7 billion) in guarantees to secure their money if it goes awry.

The EU is worried about the estimated 50,000 Africans who risk their lives, every year, crossing the Mediterranean because there is nothing at home.

A Lonely Planet For The Child Refugee

“Hope is what we are offering,” says Roberto Ridolfi, a former EU ambassador in Malawi, Uganda and Namibia, now the Director for Sustainable Growth and Development at the European Commission. He wrote the new investment policy and hopes it will navigate through the European Parliament by the end of July.

“Hope? We Africans have to work for this hope,” declared the Vice President of Côte d’Ivoire Daniel Kablan Duncan, sagely, when I asked him about it a few hours later.

Not all Africans in Brussels were happy. The Deputy Chairman of the African Union, Thomas Kwesi Quartey from Ghana, complained that the continent had not been consulted.

“It’s like someone coming in and planning alterations to your house without asking you,” he says.

How long it will take and how many jobs the plan will create is likely to be another question. When dealing with the governments of Africa the latter, in the shape of thousands of jobs, is likely to demanded by State House sooner rather than later. There was a lot of talk about so-called “sustainable jobs” in Brussels – with unemployment plaguing many African countries along with a rising number of discontent youth, the leadership of Africa wants vast numbers before  sustainability.

The problem is many of the high-tech companies interested in plugging the gaping infrastructure gaps in Africa employ few people. Take a foreign investor in Africa, 46-year-old Philip Gahn, based in San Diego, California, who runs an IT network in a number of countries, including Kenya, Uganda and Botswana.

Gahn, of Asian origin, is a maverick entrepreneur with a remarkable life. He was adopted by Ohio farmers and went to the Massachusetts Institute of Technology at the age of 14.

“It didn’t bother me about being young, there was a 10-year-old girl there doing her master’s!” he chuckles in Brussels.

By the age of 17, Gahn had graduated as an aeronautical engineer, but never went near a plane.

“They weren’t building airliners in the 80s.”

So he began in IT and became an entrepreneur that led to his current investment of $5.5 million into RippleNami, an information gathering network in Africa, with 12 million users, that draws on satellite technology. His system can tell you how many cows and chickens there are in Kenya; he gives farmers the price of cabbages so they can pick the most lucrative market. In Uganda, his system tells fisherman the price of fish so they can make the most valuable catch of the day on Lake Victoria.

“We are into big data, being the brains of the government,” he says.

How many people does he employ in his African network? Two, yes, enough to fit into the front seats of a car.

“We use artificial intelligence,” says Gahn.

Job creation is likely to be just one of the sticking points of this brave new future of investing in African entrepreneurs. The EU says 72% of foreign investment, according to 2012 figures, is concentrated in the continent’s 10 resource rich nations with a mere 6% going to what it calls fragile countries. It wants to help these fragile countries. How many countries will own up to being that?

I recall at the World Economic Forum in Durban in May, President Robert Mugabe being asked  about Zimbabwe.

The Pain Of Mugabe

“I don’t think you can call us a fragile country. You can call the United States a fragile country.”

One of the many political mine fields the EU will have to navigate with this brave investment plan. It will take brave men and women to see it through.

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Related Topics: #Investment EU-Africa Business Forum Brussels.