Media can boost
interest in Africa
By David Hampshire, Managing Director, Diageo Africa
(First published in Business
Day, 21 June, 2004)
As someone who has lived and worked on the continent
for over thirty years, I am conscious of the fact that,
outside of Africa, there is relatively little media reporting
about the continent, and exceptionally little reporting
about business in Africa.
A survey carried out last year by africapractice, a specialist
public affairs consultancy, revealed that Argentina alone
receives more economic coverage in key US and European
media than the entire continent of Africa. Against this
background, is it any wonder that Africa struggles to attract
first time investors?
Informed readers of this newspaper will know that last
year Africa's stock markets provided some of the world's
biggest returns. For example, the market in Ghana delivered
a 33% return on investment, while in Botswana it was a
staggering 41.4%. Meanwhile, in the same year Britain's
FTSE-100 index posted a loss of 14.2% and the US S&P
500 shed 22.4%. The 'basket case' image of Africa, so frequently
depicted in western media, is clearly far from the truth.
The case for promoting investment from the private sector
isn't just commercial. Africa needs to attract a massive
amount of foreign direct investment if the Millennium Development
Goals are to be achieved. The World Bank estimates that
sub-Saharan Africa requires in excess of US$26 billion
in the period 2005-2010 to maintain and expand its infrastructure
to meet growing population demand. This is a formidable
challenge.
A lot more can be done to address the important issue
of inadequate developed world reporting on business in
Africa. African countries suffer from being perceived as
a single geo-political unit, with shared problems and potential.
All too often, the focus is on the problems.
Without an improvement in the amount and quality of information
available to international investors, the 'negative' stereotype
will persist and African nations will continue to struggle
to attract greater flows of FDI, depriving governments
of the additional revenues they need to invest in basic
social services and infrastructure.
At Diageo we have introduced a set of initiatives that
will, we believe, make a positive contribution to addressing
Africa's marginalisation in the international media. At
the heart of this programme are the Diageo Africa Business
Reporting Awards. These new awards, for international news
agencies and journalists, aim to focus attention on the
shortfall in business reporting on Africa, and encourage
more international correspondents to report on the continent's
business environment.
The media plays an important role in building investor
confidence and in helping to distinguish actual from perceived
risk. The Monterrey Business Steering Committee established
that a lack of accurate information on African projects
is levying a heavy tax on their overall costs by inflating
their risk profiles - in some cases as much as 30%.
I recognise, of course, that improved reporting is not
a panacea. More must also be done to stimulate local enterprise,
for example through the provision of cheap loan finance
and the reduction of business regulations.
According to the World Bank study Doing Business in 2004,
business entry costs as a percentage of GDP per capita
are 94% in Africa. This compares with less than 3% at best
in G8 countries and 67% in Central Europe.
Helping to improve the standards of international reporting
on African business will help to strengthen Africa's appeal
among international investing companies. Without improved
awareness among international investors, Africa cannot
hope to compete for the remaining 99% of total global flows
of foreign direct investment which currently bypass the
continent.
Copyright (c) 2004 BDFM Publishers (Pty) Ltd. Reproduced
with permission. |
