WorldCity Business Magazine

Africa beyond the cliches

by Mary Dempsey

South Florida knows how to trade with Latin America. Now it’s time to turn attention to Africa, according to a panel of experts.

Three years have passed since Citrix, the Fort Lauderdale-based technology company, engineered a cyber connection for a small city with no computers and an unusual location.

It’s not in South Florida. Or the United States. Or even Latin America, which is a de facto part of Miami’s neighborhood.

Rather, it is in Agogo, Ghana.

South Florida’s executives are old hands at building business relationships with companies and communities in Latin America, the Caribbean and, more recently Europe and Asia. But Africa has been little more than a blip on the radar screen.

It is long overdue for attention, according to a panel of experts at a recent DHL Connections event.

Panelists pointed to the Citrix experience in Ghana as an example of how risk can translate into success. Today local schools and business entrepreneurs tap that town’s tech center, which was made possible by additional help from an international satellite company and specialists who taught local residents how to use the computers. Among other things, the 18 computers in Agogo are used by farmers tracking their organic honey exports or getting in touch with the U.S. representatives marketing the product.

“The center becomes part of the learning experience. It is also going to be the repository of cultural information; it can be used by those interested in tracing their African roots. It opens the door to entrepreneurial connections,” said Jo Moskowitz, director of community and government affairs at Citrix. “The opportunities are limitless. This is a recipe for future cyber cities.”

Business prospects especially for South Florida companies were the focus of the May 24 gathering titled “Africa, beyond the cliches.”

“Most of the countries are elected democracies. Some are struggling with challenges, but all are striving for economic development,” Jean Michel Caffin, Bureau Veritas’ chief executive for North American certification, inspection and transport/logistics services, told participants at the breakfast briefing. “Africa is a part of the world where there is opportunity.”

Steven Hayes, president of the Corporate Council on Africa, said there’s a crucial corollary to that statement: U.S. companies are missing that opportunity and there will be serious consequences. Hayes said China and India are embracing bilateral trade opportunities in Africa while U.S. involvement remains stagnant.

“We’re in danger of losing allies. We’re in danger of losing major market share unless we become more engaged in Africa,” said Hayes, who directs the leading association for U.S. businesses operating in Africa. The Corporate Council on Africa has about 190 members, and they represent as much as 90 percent of all U.S. investment in the region.

Moskowitz and Hayes, who is based in Washington, D.C., were joined on the WorldCity panel by Christine Boldt, executive vice president of the Association of Flower Importers of Florida. Caffin, whose French-based employer has 30 offices in Africa, served as moderator.

Both the sheer size of Africa the United States could fit into it four times with room left over and the diversity of its 54 countries give the continent great market potential. At the same time, some African nations already have become important trading partners with the United States. About 14 percent of U.S. foreign oil imports come from Africa and there are estimates that the level could swell to 25 percent over the next decade.

Among the 21 countries that each post more than $2 billion a year in bilateral trade with Houston the United States’ top energy hub four are in Africa, according to WorldCity analysis of petroleum traffic in and out of the Houston/Galveston Customs District. They are Nigeria, Saudi Arabia, Algeria and Angola.

Angola’s trade with Houston was the fastest growing of any country, rising 121 percent last year.

Hayes said Africa’s oil industry is rife with business opportunities. “They need infrastructure development services. That should come from the United States,” he said. “Another area to look at is Nigeria. A lot of people immediately think of the Nigerian e-mail schemes but you have to remember that that country has one-fourth of the population of Africa.”

Last year, trade between the United States and Nigeria rose nearly 45 percent to total $25.8 billion. That put Nigeria in the No. 22 spot among top trade partners. However, the trade was lopsided with nearly 94 percent made up of U.S. imports from Nigeria.

Hayes noted that South Africa and Ghana have been seen as likely places for investment, but he encouraged participants at the breakfast briefing to look at more non-traditional markets like Tanzania, Mauritius, Madagascar, Botswana, Namibia, Morocco and Tunisia. He also pointed to Libya, noting that the U.S. government had normalized relations with the oil-rich nation.

Botswana, Mauritius and Ghana have tax incentives for investors while other countries are now exploring duty-free trade zones.

The panelists cautioned that Africa should not be viewed as a bloc, but as a collection of individual countries. “For every country with a crisis, there is a very stable country,” Caffin said.

Hayes agreed, adding that not every country is ready for investment. In response to a question by Barbara Howard, of Barbara Howard & Associates consulting firm, he warned against going into Cote d’Ivoire, known as the Ivory Coast in English.

Cote d’Ivoire has been in political upheaval for four years with both rebels and pro-government militias contributing to the violence and instability. The country is headed toward a presidential election in October. “Cote d’Ivoire is very unsettled, it’s still the hot spot in West Africa. I’d look at Liberia first,” Hayes said. “Many companies have lost investment in Cote d’Ivoire.”

He said Kenya is politically unsettled, too, adding: “Tanzania is better because of transparency standards.

Where industries are ready for investment? The panelists pointed to agriculture, minerals and tourism. “Most of the American hotel industry has not invested in Africa,” Hayes said. “To me that’s an enormous mystery.”

Panelists at the briefing said the Miami Customs District is in an enviable position when it comes to one of Africa’s hottest new products: cut flowers.

About 88 percent of cut flowers to the United States enter through Miami. Currently, 60 percent of them are from Colombia and another 30 percent from Ecuador. The Miami-Dade Customs District not only has airport and warehouse facilities suited to perishable imports like flowers, but it also has expedited U.S. Department of Agriculture procedures and pushed for round-the-clock Customs shifts for flowers the result of hard lobbying by the Association of Flower Importers of Florida, or AFIF.

Once the flowers land, there is a network of 26 trucking companies that transport the in refrigerated vehicles to other U.S. locations. By comparison, the Los Angeles Customs District the largest Customs district in the country has just two truck lines for flowers.

Boldt said Miami is advantageously placed to tap the African flower industry. Ethiopia is the newest market; it began flower exporting in quantity a year ago and has Category 1 rating from the U.S. Federal Aviation Administration. That means Ethiopian growers could fly flowers directly to Miami if there were proper air links.

“Ethiopia is interested in moving beyond markets Germany and Amsterdam,” Boldt said, adding that Ethiopian roses are now sold at Sam’s Club, Wal-Mart and Kmart stores in the United States.

Kenya, meanwhile, is making a mark with small roses.

Boldt explained that African flower growers traditionally exported to Europe, but China has begun to encroach on that market. Now African nations are looking for markets that are still undeveloped when it comes to flower-buying habits. The United States is one of the biggest.

Residents of the United States, per capita, spend an average of $25 a year on flowers. In Switzerland, by comparison, the level is $101 per year, Boldt said.

Event participants were told that the website for Enterprise Florida, the state’s economic development agency a joint effort by both the public and private sectors has information on Florida opportunities with South Africa. The annual AfriCando conference also was expected to incorporate information on business and development in Africa. That July 20-22 event at Florida Memorial University is being billed as a “hemispheric summit on science, technology and research for Africa’s development.”

Trade with Africa has not been suppressed simply because U.S. companies are afraid of the risk. There are more concrete obstacles, including poor air connections and infrastructure problems. However, panelists at the event noted that those shortfalls could turn into business opportunities. The panelists also played down concerns about corruption in Africa.

“The highest rates of return and the highest rates of risk are in Africa,” Hayes acknowledged, although he added that the most dramatic returns on investment are focused in the oil and mineral sectors.