Apr 13, 2007

Big Business Finds Traction in Africa

by Laura Starita

The number of people worldwide living in poverty has declined over the past decade, and much of that decline is attributed to the increase in financial prosperity experienced by countries in Asia (China and India, Taiwan, Singapore, South Korea) and South America (Brazil, Argentina) whose economies have been growing rapidly. There is one continent where poverty seems, from the outside, an intractable problem, however: Africa. More Africans—especially south of the Sahara—live on less than $1 a day now than did a decade a go. One dynamic that is contributing to the perpetuation of poverty in the region is that, aside from South Africa, the countries of the sub-Sahara have economies largely dependent on agriculture and natural resources, vulnerable industries that don’t produce enough employment to allow their profits to trickle down to the impoverished classes.

This may soon change. Two articles have come out this week that point to new possibilities for prosperity in sub-Saharan Africa. One in The New York Times profiles a call center outsourcer in Nairobi, Kenya that employs a few hundred people and is slowly expanding its business from phone sales for US-based companies to customer service. The second piece from Fortune magazine highlights the big US concerns doing business in Rwanda: Starbucks and Costco buy Rwanda-grown coffee; Google is offering its software to Rwandan government agencies and universities. Together, they point to a nascent diversifying trend in the African economy, which is great news, since business development brings skills transfer, more jobs and access to market information that allows small businesses to sell their goods at market prices. And those who criticize these countries as corrupt, in the case of Kenya, or non-democratic, in the case of Rwanda, should be happy as well, since economic growth is often correlated with decreases in corruption and increases in political and press freedoms. Of course, most sub-Saharan African countries are still lacking basic infrastructure necessary to accommodate big business, from a complete system of passable roads to inexpensive and reliable internet service. But entrepreneurs are also focusing on those issues in the hope of making the region, long term, more hospitable to business.

New York Times: The African Connection

Fortune: Why CEOs Love Rwanda

Wall Street Journal: Out of Boston: Entrepreneur Has Quixotic Goal of Wiring Rwanda