Giving Thoughts

Highlights from the Global Social Investing Council: Africa

By Jeff Hoffman, Program Director, The Conference Board Global Social Investing Council

The Global Social Investing Council met for its bi-annual meeting in Washington, D.C., in May, and touched on a broad range of topics, including advancing investment in new international markets, and a look ahead at the future of CSR impact. In this post, we summarize the highlights from the discussions on Africa.

Africa is a continent so large that India, China and the United States combined could easily fit within its footprint. It’s rich in culture, natural resources and opportunity and the vast diversity that it offers on all fronts makes it a promising destination for new and emerging markets. Yet, as companies look at Africa for investments, either for profit or social, the immense scale and variety of potential challenges makes any venture a daunting task.

The Conference Board’s Global Social Investing Council conducted a session to better equip its members with an understanding of Africa. The group heard a distinguished panel from the Corporate Council on Africa, Last Mile Health, KPMG Center of Excellence for Development, The World Bank, and Medtronic. They discussed the myriad policies and lessons learned that carry us from disaster response to strategic involvement, and elaborated on the roles that corporations and their social investment commitments can play to support Africa’s development.

To help ground the group, it was noted that often people unwisely refer to Africa as a single country. On the contrary, Africa has 54 countries, with many languages, cultures, political systems, terrains, economies, and levels of development. Today, it has a population of 1.1 billion people, which is expected to double by the end of the century. It holds 33 percent of the world’s poor despite comprising only 11 percent of the world’s population. More than 780 million people lack clean drinking water, most live in rural areas, and only 15 countries have gone through the last ten years without conflict. Close to 50 percent of the continent’s population is underemployed or unemployed.

Leading issues

The council noted that electricity and power is a leading issue that, if corrected, could be a solution to many problems. Power generation capacity is grossly inadequate, with the entire continent producing an equivalent amount of power as the country of Spain. As a result, 600 million people in Africa lack access to power. For those who do have access, the availability of electricity is inconsistent. Power outages cause havoc with water pumps, refrigeration, lighting and other infrastructure needed to operate businesses and fulfill basic human needs.

In spite of all this, there are some positive signs. Foreign investment has helped improve the power situation, with 34 percent of Chinese investment in Africa now in the energy sector. Investment in infrastructure has tripled in the last decade, and mobile use is growing at more than 40 percent a year—twice the global growth rate. There has been a dramatic increase in private sector investment as more eyes turn to the continent for potential opportunities.

A challenging investment environment

Many council members acknowledged that investing in Africa is not easy. Although there is a lot of hype, development is uneven, and successful ventures require a partner on the ground to help maneuver daily challenges. There is often conflict between the government and the private sector, and corruption can be a significant hindrance to business.

The council explored the possibility of turning to the public sector for support (for instance, for company financing since funding from foreign banks is still hard to attain), especially while the private sector attempts to gain a surer footing.

The group also addressed intellectual capital, which some people feel is lacking in Africa, especially when it comes to finding individuals with experience who can also execute rapidly at a large scale. The council concluded that while it is clear that the continent is rich in natural and intellectual resources, companies looking to grow will have limited success unless they begin to include Africans in leadership, and view them as intellectual peers with capacity for self-determination.

Investing in impact

So what can companies looking to expand in Africa do to maximize their social impact? Investing in power, supporting education, providing economic opportunity for young people, and funding healthcare are just a few of the many possibilities mentioned at the council for responsible involvement by the private sector. In the diverse African landscape, micro economies are constantly emerging, new entrepreneurs are establishing businesses every day, technology is breaking down barriers and various multinational organizations are making a positive difference.

For more information, please visit the Corporate Council on Africa, Africare, and Last Mile Health.

About the author:

Jeff Hoffman is an accomplished corporate executive who has served on the global stage in the areas of corporate social responsibility, philanthropy, human resources, operations, special projects and events. Through board and commission leadership roles, he has a distinguished history working with non-profit, civic and government agencies on strategic direction and innovative programs. Jeff is president of Jeff Hoffman & Associates, a global corporate citizenship, philanthropy and civic engagement firm that enables businesses, organizations and individuals re-imagine a world full of hope, promise and opportunity. He also serves as Program Director for The Conference Board Global Social Investing Council.