NEW YORK and CAPE TOWN, South Africa — African governments and business communities hope that South Africa's success in hosting the 2010 World Cup will spur a massive increase in investment and private sector development for all of Africa.
“It is exciting to see that business leaders around the world do wish to leverage off the tournament,” said Danny Jordaan, chief executive officer of the South Africa’s World Cup Organizing Committee. “This is one of the fundamental reasons why we pursued the idea of hosting the World Cup.”
South Africa’s economy reportedly grew by 0.5 percent solely because of the World Cup soccer tournament and is forecast to grow by a total of 3 percent in 2010.
Jordaan and other African leaders spoke at the Fortune Global Forum in New York City and then again at an international conference in Cape Town. Together, more than 300 participants representing 36 countries discussed a vision of the African continent as a major global economic power rather than the recipient of foreign aid.
“We need to get away from this idea that Africa is about aid, health. Europeans and Americans need to start changing their minds,” said Maria Ramos, group chief executive of the South African banking group, ABSA. “We need to unlock economic value and entrepreneurship in Africa.”
World and business leaders at the Clinton Global Initiative, held in New York City last week, delivered a similar message. Market-based solutions and unlocking entrepreneurial potential in the third world are critical components to ending poverty and creating sustainable development, they said.
“There is tremendous untapped potential in the four billion people who live at the bottom of the economic pyramid,” said Leila Janah, CEO of Samasource, a nonprofit that employs people in Kenya and Pakistan via the internet to do jobs such as data-entry for businesses in the United States.
Six hundred business leaders as well as 67 current and former heads of state attended this year's Clinton Global Initiative. The number of commitments made by corporations and businesses to help solve issues related to poverty has increased from a third when the initiative started six years ago to more than 50 percent this year, according to former President Bill Clinton.
In Africa, foreign direct investment surpassed the amount of aid for the first time in history by $8 billion in 2008, according to the Organization for Economic Cooperation and Development. Foreign direct investment in Africa is now more than $68 billion per year.
Based on statistics like this, African government and business leaders are working to re-brand the international image of the continent from poverty-stricken to a place on the brink of a dramatic economic ascendancy.
“Sub-Saharan Africa is the third fastest growing region in the world, after China and India, due to sustained demand for commodities, sound economic policies and improved political conditions,” said South African President Jacob Zuma.
“These together with opportunities in infrastructure, transport, communications, energy and demand for consumer goods, present the continent as the next frontier of economic growth.”
Africa’s collective gross domestic product in 2009 was roughly equivalent to Brazil’s or Russia’s at $1.6 trillion, in part because of reduced inflation rates, urbanization, spreading mobile technology and increased foreign direct investment, according a report by the McKinsey Global Institute.
But rapid growth in Africa was also helped by governments such as Nigeria strengthening legal systems and privatizing state-owned enterprises, the McKinsey study said. Between 1999 and 2006, Nigeria privatized 116 companies and the country’s GDP grew by 6 percent in 2009.
The outlook for African countries such as Ethiopia, Sierra Leone and Mali — which all have GDPs of less than $500 per capita according to the World Bank, and have suffered from oppressive governments and conflicts — is not so sunny.
And the Democratic Republic of Congo, which celebrated its 50th anniversary of independence this month, will need to end decades of war and corruption before it can begin to recuperate its infrastructure and attract significant foreign investments.
Nevertheless, the overwhelming message of both the FIFA World Cup and the Fortune Global Forum was optimism about Africa's ability to generate profits.
“Let’s get out there and invest,” said Chris Kirubi, one of Kenya’s wealthiest industrialists, who pointed out that while he had lost 30 to 40 percent of his investments in Greece in recent months, his financial stakes in East Africa continue double every year.
Clinton was the forum’s special guest speaker and spoke of his recent travels in Malawi and Tanzania where the Clinton Foundation is funding humanitarian projects.
Noting the opulent setting of the Cape Town International Convention Center, Clinton said, “Here we are, we’re in Africa, living like kings in the Westin, taking for granted all the things that we take for granted … Not very far from here there are people who can take none of this for granted.”
Clinton asked the audience to remember that even though there are huge economic opportunities in Africa for non-Africans, the only way for the continent to truly advance is to focus on creating opportunity for Africans themselves.
“Africa’s opportunity first of all must not belong to its outside investors or well-meaning helpers but its own incredibly gifted people,” he said.
The shift in attitude for countries who have viewed Africa in humanitarian terms for decades will be uncomfortable, predicted Tom Cargill, author of a report on Africa’s role in the “post-G8 world” by the U.K. think tank, the Royal Institute for International Affairs.
“Without this shift, many of Africa’s traditional partners, especially in Europe and North America,” warned Cargill, “will lose global influence and trade advantages to the to the emerging powers in Asia, Africa and South America.”