Cummins Inc., a leading producer of truck and machinery engines, plans to quadruple sales to Africa within five years, with direct yearly investments of $15 million to train staff and build sales offices throughout the continent. Other major corporations are not far behind. The Wall Street Journal reports that Caterpillar Inc., Harley-Davidson Inc., General Electric Co, Google, and Walmart are among the dozens of other companies racing to establish stronger footholds in the region.
The sun is rising on African economies. Looking past oil and mineral wealth, Africa has business opportunity. It is time for the international community to look past simply giving aid to Africa, and invest in Africa. With a growing middle class and large under-utilized populations eager for opportunity, Africa is the new frontier for rapid economic development.
Today, 40% of Africans reside in urban areas. This translates into a demand for housing, common household appliances, technological goods and services, and infrastructure. With this increased demand and purchasing power, Africans can import it or make it. As Donald Kaberuka, the president of the African Development Bank, noted, “Either way creates business.”
The way forward is investment coupled with targeted aid. The challenge with investment alone is an unprepared, untrained workforce. Foreign aid could help meet that need. However, foreign aid could never generate the economic growth and sustainability of private industry. Business activity in nearly all of its varieties reaches people in uninimaginable ways and has a multiplier affect that encourages innovation and new industry.
Current free trade agreements under negotiation could increase GDP across the continent by $60 billion per year, which would trump international aid to Africa by $20 million. These trade agreements could be crucial in encouraging investment and tapping into the growing jobs and consumer markets in Africa.
If African countries moved from 5-6% growth to 10-11% growth, the impact on the global economy would be dramatic. Investment and goods would flow in and out of Africa boosting economic systems around the globe.
A key for this to come about is tapping into African youth. Right now only 5% of Africans are enrolled in university courses. If African youth continue to be under-utilized, there is a increased risk that they will become targets for recruitment in militant activities that could have negative regional and international impacts.
“The obvious solution then is to channel their energies into positive and productive activities by empowering them in a manner that promotes sustainable development.” Abdoulie Janneh, UN Under Secretary-General, explained.
The task is simple, and the rewards are bountiful. Assist African nations in training youth, and then reap the rewards of investment, innovation, and economic growth worldwide.
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