SEATTLE, Washington — There has been an increased interest in investing in Africa over the past 20 years. The GDP for sub-Saharan Africa, an area where 10 of the poorest countries reside, rose from $396 billion in 2000 to $1.69 trillion in 2017. Investors are taking notice of a continent that is set to rise out of poverty and support middle-income consumers. One country that is eyeing investment opportunities in Africa is South Korea or the Republic of Korea (ROK), which successfully moved from poverty after a gradual increase in prosperity and wealth during the 1960s and 1970s. The ROK sees potential in investing in the future of Africa.
The ROK and Africa Teaming Up
On December 4 and 5, 2018, the Republic of Korea’s Ministry of Foreign Affairs and the Korea-Africa Foundation hosted discussions about Africa. Part of the dialogue was about understanding Africa and helping build an entrepreneurial presence on the continent. The ROK believes that educating its public about the investment opportunities in Africa as well as the successes and challenges along with investment, will lead others to understand the future of Africa.
There will be more than 1.7 billion people in Africa by 2030 with a possible spending power of $6.7 trillion for consumer and business spending. The discussions between the two nations resulted in an expressed interest in developing economic and social relations between South Korea and Africa.
Akinwumi A. Adesina, President of the African Development Bank, believes partnering with South Korea is a “win-win proposition.” At a meeting in Seoul on February 7, 2019, Adesina and representatives of Busan Metropolitan City, Busan Techo Park and Korea’s Green Technology Center, spoke of vast opportunities for a partnership between the two nations. In the meeting, green growth, agriculture, smart urban transportation management and other areas were key points of discussion.
In Chad, more than 82 percent of residents have an agricultural job, and this statistic has been at more than 80 percent since 1991. This is one reason many external investors have a main focus on the agriculture industry. In an effort to improve productivity and sustainability, Korea and Africa are investing in the agriculture industry.
Global Interest in the Future of Africa
According to Adesina, providing access to electricity in Africa is the top priority for industrialization. Bringing Africa out of poverty is dependent on green technology, some of which entails providing solar-powered agricultural equipment. One solar power initiative under development is Desert to Power, which is the largest solar power project in the world. This initiative estimates it will provide 10,000 MW in the Sahel region, an area of Eritrea in the east.
Adesina also mentioned using drones in agriculture. Busan City, one party at the discussion, is a Smart City and a leader in artificial intelligence. Busan City is a major hub for innovation and technology and it has set its sights on Africa, which has been encouraging for the continent. There are still some obstacles that Adesina has stated, such as access to finance, sustainability and energy.
The African Development Bank has already invested $650 million in trade finance lines, $1 billion in AfreximBank and $350 million in trade insurance. The financing has included small and mid-sized companies, which account for more than 80 percent of businesses in Africa. In less than 72 hours, the 2018 African Investment Forum in South Africa helped pull more than $38.7 billion from investors. Adesina stated that it shows a “strong indication of global interest in emerging markets.”
Peace Summit Speech
In an effort to show Africa is ready for the future, Adesina spoke at the World Peace Summit of Global Leaders on February 10, 2019. At the summit, he stated the successes, such as the five million African’s with new or improved electricity, the 19 million with better agricultural technology and the eight million with better sanitation and drinking water among others. At this rate, these numbers will increase so that every African will live as those in South Korea, a country that was once in poverty, yet successfully rose to first-world status.
– Lucas Schmidt