FTI Consulting Points to US Investor “Dunno” Over Africa

FTI Consulting

Research conducted by FTI Consulting recently indicates a fairly dramatic lack of investor knowledge on the African continent. Released in time for President Obama’s visits to selected African countries, the study laid bare wide gaps in knowledge of US-Africa trade issues.

Namibia, another place investors likely know little of - courtesy Rui Ornelas

Namibia, another place investors likely know little of – courtesy Rui Ornelas

FTI Consulting released in May the study showed the narrow view most investor types have regarding the potential for African initiatives, with many decision makers focused on such apparent variables as labor unrest in the mining sector. This focus on one segment, and other negatives existent in Africa for decades, obviously negates substantial opportunities. Among the findings the research unearthed, the study found:

  • Only two in every five investors surveyed think trade relations between the United States and South Africa are strong, while 45 percent consider such business relations as less strong than they should be.
  • Beyond trade issues, more than seven in ten of the U.S. institutional investors surveyed feel that political links between the South Africa and the United States should be stronger.

The study also showed a potential ignorance of the real issues surrounding Africa investment when the countries most likely to see investment were revealed. Perhaps some level of geographic or geo-political blindness has struck investors as South Africa, Egypt, and Kenya lead other countries in many projections. Conversely, Alan Arguile, South Africa Head of the Strategic Communications segment at FTI Consulting offed this assessment via the firm’s press:

“Africa has the potential to be a destination of choice for U.S. institutional investors given its abundant natural resources, eco-tourism potential and favourable demographics. Many African countries already are capitalising on their various assets and have been identified as high-growth geographies by institutional investors. However, it is critical to sustained economic growth that key African messages are continually heard, expanded and understood so investors are aware of the investment opportunities in during a time of great global trade competition. Our research showed there still is work to be done in this regard.”

Anyone who reads worldwide investing headlines knows China has been targeting Africa for some times now. The Obama trip further indicates that the US sees the lagging US-Africa dynamic too. Boom countries such as Tanzania are already seeing vast investment and trade with China, India, and Japan. The huge reserves of natural gas there, just as an instance, label the country as one of the richest potentially on the continent. The potential for such places, and for the US, is vast.

Despite Africa’s problems, the atmosphere for growth and investment there is far more positive than the  FTI Consulting findings and the indicated investor views it foretells of indicate. Even looking at China’s bilateral treaties (BTs) in Africa gives pause for a bit of concern. Currently Botswana, Cameroon, Cote D’Ivorie, Djibouti, Ethiopia, Egypt, Ghana, Madagascar, Morocco, Tunisia, and Uganda all have agreements with the Chinese. Many have accused China of a sort of neo-colonialist attitude and stance toward the old continent. Interestingly, Bloomberg named Namibia (top image) one of the top emerging economies in all Africa, but not even the Chinese seems to have flocked to open that countries gates of prosperity.

Clearly a more refined view of US-Africa trade and investment relations is in order. Not much has changed in the last two decades with people’s mental maps in the United States, and this probably goes for the top of the investing pyramid, as well as for everyday America. This research was conducted online with 90 U.S. based institutional investors between 17th and 24th of June 2013. Respondents are from financial institutions where the accumulated value of assets under management is in excess of USD $1 trillion. For more information about the research readers should check out the original release via the links above.

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