The African Business Review Jan-Feb 2014 | Page 27

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here is clear evidence that investments in sub-Saharan Africa are
now boasting some of the highest rates of return in the world.
Based on foreign direct investment and non-performing loan
data, African investments seem to be out performing investments in
Asia, Europe, and the Americas (‘Africa: The next investment frontier,’
Luc Rigouzzo, The African Business Review, May/June 2013). The
demand for new goods and services in sub-Saharan Africa remains so
high, almost anyone with skills, good intuition, and financial capital
can tap into an emerging market and essentially strike it rich. Even
the non-profit sector has potential. Educational markets, for example,
are in high demand. In many universities, classes have become so
oversubscribed students literally spill into the hallway.

Given the scope of unmet needs, the question is not really whether
one should consider investing in Africa, but how one should invest
in Africa. Foreign investors can help stabilize countries by choosing
to invest in businesses that help grow a diverse manufacturing and
service sector, and by abiding by state laws and regulations. This type
of investing requires a longer-term commitment and an acceptance that
the profit margin might be smaller than one may have hoped. Or an

Foreign investors can help stabilize countries by
choosing businesses that help grow a diverse
manufacturing and service sector, and by abiding
by state laws and regulations.
investor can enter the market for short-term gains, and perhaps operate
under-the-table greasing the wheels of business through bribery and
other methods of crony capitalism. My hope is that readers prefer the
former approach to investing. Therefore, in order to address the risks
and rewards of corporate social responsibility in emergent African
economies, I use Ghana as a case study.

According to the World Bank, foreign direct investments in Ghana
accounted for about 8.2% of its GDP in 2012. That means that foreign
investments contribute significantly to the country’s economy. But the
numbers tell us very little about the experience of doing business in
Ghana or the value of those investments to the lives of most Ghanaians.
Importantly, the Democratic Republic of the Congo, a fairly unstable
country, boasted a similar net inflow of foreign investments in 2012;
10.2% of the GDP. Therefore, one cannot extrapolate whether or not a
country is politically or economically stable by the percentage of foreign
direct investments to overall GDP.

What makes Ghana attractive to many investors is that from 1989
to 2003 rules for doing business were enacted in order to align corporate
interests with the needs of the state. As one would expect, Ghana has
everything from a Banking Law (1989) to a Labour Act (2003) as well

Given the combination of unmet needs and
infrastructural challenges, investing in Ghana
requires a commitment to helping regularize
and possibly reform the systems related to your
business.
as numerous acts a