The Congo River Basin forests, in Central Africa, represent the largest carbon sink in the world. Thanks to carbon credits, the monetary value of these forests’ carbon absorption power represents some USD 55 billion per year.
Despite this, Central Africa’s forests have attracted only 12% of international financing for sustainable forest management in the past decade, way behind the Amazon River Basin (34%) and Southeast Asia’s forests (55%).
Clearly, there is a reluctance to invest in Africa. But why?
New research by the African Union Commission and the OECD suggests that one big reason is insufficient information and data. This is linked with a second reason: media outlets both in Africa and around the world tend to highlight the challenges of investing on the continent, while downplaying the opportunities.
While certainly not the only barrier to sustainable development in Africa, it’s clear that the continent suffers from a communication problem – and this is where we can step in.
Weak information and data = weak investment
Potential investors need a range of statistical data to conduct risk assessments, devise mitigation strategies, or spot good investment opportunities. They also need data to meet reporting requirements, for example on sustainability.
The amount and kind of available data varies across African countries, which can also have vastly different statistical capacities.
In investor interviews and surveys conducted for the Africa’s Development Dynamics Report (AfDD) 2023, a lack of information and data was cited as a barrier to reliable assessments and informed financial decisions. In some cases, this led to delays, as investors decided to “wait and see” how markets would evolve. While in other cases, potential investments were abandoned entirely.
And the Global Impact Investing Network has found that, in its annual surveys, impact investors cite a lack of data as a key barrier to concretely demonstrating results.
For African countries, communicating more and better data could also be a path to better credit ratings. AfDD 2023 finds that rating agencies often give countries with missing data poorer credit ratings. This drives up the cost of capital and leads investors to overestimate risks.
In the energy sector, for example, AfDD 2023 finds that the cost of capital in Africa in 2021 was about seven times higher than in Europe and North America.
The bottom line is: communicators in organisations that want to help promote investment in Africa can help ensure that stakeholders have access to accurate and timely data in user-friendly formats.
African business has a narrative problem
Yet good data and information is not enough.
There is growing evidence to show that both African and international media paint a distorted and overly negative picture of business and investment on the continent.
Africa No Filter finds that African media are twice as likely to reference corruption than international media. Most international outlets cover African financial markets only in relation to foreign powers like the United States, China and Russia.
Coverage of African business is also geographically narrow: reporting tends to focus largely on South Africa, Nigeria and sometimes Kenya; other African countries get little to no coverage.
In May, the OECD DevCom network and Africa Communications Week brought together public relations and policy experts from across the continent to discuss the stories that weren’t being told. They agreed that we do not often read about the continent’s investment potential.
Take the energy sector. According to the IEA’s Africa Energy Outlook 2022, Africa is endowed with 60% of the world’s best solar resources, but only 1% of installed solar generation capacity.
They also mentioned Africa’s demographics. With a median age of 19 years, Africa is among the youngest regions in the world. According to the UN, Sub-Saharan Africa alone will account for more than half of the world’s population growth between 2022 and 2050. Africa also has the world’s fastest-growing middle class, which is driving demand for consumer goods and investment.
And Africa’s startup ecosystem is vibrant, with investment opportunities in fintech, health tech, clean tech, and more. In 2022, Africa was the only world region with positive year-on-year growth in start-up funding. The continent has gone from zero to seven startup unicorns – valued at over US $1 billion – in the last decade alone, with six of those unicorns in fintech.
There is no single path to success, but our discussion generated many great ideas on how to help promote these and other narratives about Africa’s financial landscape.
- For one, development communicators have a responsibility to diversify the countries they talk about. Let us not always focus on the same three markets – South Africa, Nigeria, and Kenya – when we go to the media.
- We should also help spread awareness about progress in improving policies and encouraging trade. This includes the African Continental Free Trade Area (AfCFTA) agreement, which aims to boost trade within Africa, improve competitiveness and create jobs.
- In communicating about investment in Africa, honesty and nuance are important – particularly when speaking to a savvy business audience. Generating trust also means being open about the structural problems African economies face, including policy and regulatory challenges, while highlighting efforts to address them.
- Finally, to help boost investment, communication must be a two-way street. Just as we share information about opportunities with potential investors, investors must also be able to share feedback about their concerns and the challenges they face. This will help uncover sticking points in the investment process, so problems can be addressed and solutions can be found. Communicators can help create spaces for exchange between business and potential investors, while drawing attention to channels that already exist.
Ultimately, beyond communicating about development projects, communicators have a role to play in making development happen on the continent. Among the many tools in our arsenal, we can help promote access to information, and make sure that governments and other bodies appreciate the need for data collection and dissemination. We can highlight opportunities in a wide range of African markets, underscoring the unique assets and growth potential of each – while being honest about the continent’s structural problems. We can also support investors by helping them find and create opportunities to dialogue with business about the challenges they face.
In the coming months, there will be many opportunities to discuss and advance this agenda together. Below are just a few dates for your diaries:
- 23 August 2023 (Johannesburg): Harnessing Infrastructure Development in Africa will consider the obstacles African countries face in the infrastructure sector. What avenues are available for innovative financing to boost FDI and multilateral funding? How can we integrate ESG into infrastructure projects? (Hosted by Invest Africa)
- 1-2 September 2023 (Nairobi): The 11th Conference on Climate Change and Development in Africa will convene African policy makers, climate change and development experts and stakeholders to consider key elements of the Africa Climate Summit (Hosted by ClimDev-Africa, with the Kenyan Ministry of Environment, Climate Change & Forestry and supported by the Pan-African Climate Justice Alliance)
- 4-8 September (Nairobi): The African Climate Action Summit (4-6 September) and Africa Climate Week (ACW 2023) will build momentum ahead of COP 28. (Government of Kenya)
- 21-22 September 2023 (New York): UNSTOPPABLE AFRICA offers a deep dive on energy, digital transformation, inclusive growth and education. (The Global Africa Business Initiative)
- 17 October 2023 (London): The 10th Financial Times Africa Summit convenes businesses, policymakers and thought leaders from Africa and around the world.
- 31 October 2023 (Paris): International Economic Forum on Africa will join together OECD experts, African leaders and policy makers to discuss Africa’s sustainable development. (Organised jointly by the African Union Commission and the OECD Development Centre)
- 9-15 November (Cairo): The Intra-African Trade Fair 2023 will provide a unique platform for businesses looking to access an integrated African market. (Invest Africa)
This post is published in partnership with Africa Communications Week, a global movement building bridges between communications professionals committed to Africa’s transformation.
This post represents the personal views of the authors and should not be reported as representing the official views of Africa Communications Week, the OECD or the OECD Development Centre.
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