Business
Energy, Enery; Energy!
There are important positive externalities for neighboring countries and the region as a whole, which cannot be ignored. One could even make an
argument that the U.S. is negotiating with the EU as a whole and not singling out Germany. So, we have to be very careful about these things.
THN: How can anyone improve the business environment in Africa so that American’s private sector can see the opportunities there?
VS: The U.S. private sector is looking for profit. They need to add value for their shareholders. They will not come to the continent if its not deemed profitable. This is not charity. This is business. So, until Africa removes the stumbling blocks, progress is bound to be slow. On the supply side, Africa must take care of three things: Energy. Energy. Energy. Years ago, it was macro economic issues and then governance and then energy. But like the Mo Ibrahim Foundation argues, availability and cost of energy is now an even more important constraint than governance.
In fact, the governance issues are being addressed. But if you have a continent whose production costs, by definition, are three to four times higher than everyone else’s, then the battle is lost at entry. That is why the Power Africa initiative is critical and timely. Africans themselves have begun to focus more on energy – Kenyan president, Uhuru Kenyatta, is working on an ambitious 5000 Megawatt plant to reduce the cost of doing business in Kenya. Privatization of Nigeria’s energy sector should see the rapid rise of power supply. As part of the Obama Initiative, luminaries like Tony Elumelu are working on energy projects. On the agriculture side, many studies have shown that several African products are competitive at the farm gate – but then most of this is lost in transportation. Issues of trade facilitation and farm to market connectivity are also important elements of the competitiveness basket.
Vera Songwe is the World Bank’s Country Director for Senegal, Cape Verde, The Gambia, Guinea Bissau and Mauritania. She was most recently a Lead Economist at the World Bank where she worked in East Asia, the Middle East and North Africa, South Asia as an economist providing policy advice to governments and the private sector. She was also Country Sector Coordinator for East Asia and the Pacific region on Poverty Reduction, Economic Management and other aspects. Her areas of expertise are governance, fiscal policy, competitiveness, trade, financial markets, and agriculture and commodity price volatility, and
she’s very well published on these subjects. A nonresident Senior Fellow at the Brookings Institution, Songwe has a PhD in Mathematical Economics, and BA in Economics and Political Science.
