Be a part of the African growth story

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Your Majesty, Excellencies, Ladies and Gentlemen,

Welcome to Oslo – and thank you for inviting me to speak at the opening of this year’s Norwegian-African business summit. It is an honour for me to be here – and I am glad to see so many participants, more than 300, a hundred more people than at the last year’s summit. You will have a very exciting conference programme dealing with how to play a part in what we now like to call “the African growth story”. It’s story of today’s world. I am sure that this conference will strengthen many Norwegian-African business ties.

A few reflections on today’s theme:

The world’s “image” – so to speak – of Africa is changing. African countries are no longer perceived only as recipients of development aid. They (you) are increasingly seen as emerging markets, with huge business potential.

Norway is a relatively small, but globally connected country, trading on all continents, engaged in political issues worldwide, diversifying our economic and trade links towards emerging markets. Norway has the world’s largest sovereign wealth fund. Today, growth is happening elsewhere, than in Europe, the traditional Western club. More than half of the world’s GDP is produced in non-Western countries; in Asia, Latin-America and in Africa.

Norwegian businesses are “discovering” Africa. This is very good! The world’s image of Africa is changing. African countries are no longer perceived as recipients of development aid. Instead, they are increasingly seen as emerging markets, with huge business potential. 

Domestic revenues are now the most significant source of development financing in Africa. Aid is no longer even Africa's main source of external financing. Since 2006 private foreign investment has contributed more than aid. This tells us a story of dynamism, investments – a story of a changing Africa. 

Another illustration: Africa is also seen – increasingly – as an exciting tourist destination. Tourism is one of the fastest developing sectors on the African continent. A third illustration: African countries are now leading exporters of roses to Europe. Norwegian florists present East Africa as “Europe’s rose garden”.

Not to mention the fruits of the ICT revolution. I think we talk about a “giant leap”; today’s generation is just “jumping over” older generations when it comes to technological development and skills.

As an example: mobile phone banking has substantially increased people’s access to finance in some African countries. In South Africa, the DRC, Zambia and Kenya, mobile phone banking is taking services to people in remote areas where there are no conventional banks.

Growth in the ICT sector is now faster in Africa than in any other continent. Mobile phone penetration has soared since year 2000. The rapid developments in the ICT sector are sending a strong message about the continent’s potential for innovation.

In addition, we see more and more African business women and young women entrepreneurs on the scene. They are bringing new ideas and perspectives into some of these sectors.

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Against this background, there is reason to be optimistic about Africa and its future (and there are, in contrast to Europe, real optimism to be found in Africa, Latin-America and Asia, according to a recent The Economist survey):

• African countries are recording unprecedented economic growth, with an average annual growth rate of 5 to 6 %.
• The IMF expects that 7 of the 10 most rapidly growing economies in the world (between 2011 and 2015) will be in Africa. 
• Growth is creating an emerging African middle class of millions of consumers.

In short, Africa is a continent of opportunities.

As yet, the continent only accounts for a small proportion of the world's value added. But again: This is about to change. And the rest of the world looks to Africa.

As we all know, China’s engagement in Africa has been an important driver of economic development in the continent. India and Brazil are playing an increasingly important role as well. In 2000, trade between China and Africa was worth approximately USD 10 billion – now that figure has risen to well over 100 billion.

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Also Norwegian companies have become more interested in exploring market opportunities and establishing businesses in Africa. Although the situation varies widely from one country to another, Norway is rapidly increasing investments in African markets.

One example: Norwegian companies have invested NOK 60 billion in Angola: In 2010 Norwegian exports to Angola alone amounted to NOK 8 billion. The oil industry in Angola provides state revenues of approximately USD 23 billion, whereas aid corresponds to only 0.5 % of the national budget. Angola is still one of the most important African countries to Norway in terms of trade and investment in addition to Nigeria and South Africa.

In the meantime, in the wake of the oil and gas discoveries in many other African countries, we will see more economic cooperation also with other African countries in the coming years. In the last three to four years, significant new discoveries have for example been made in Ghana, Mozambique, Tanzania, Kenya, Uganda and Ethiopia.

Norwegian companies have a comparative advantage in particular sectors in many African countries. This is linked to the structure of the Norwegian economy and the expertise they have acquired in specific areas.

Norwegian knowledge in the energy sector has been recognised for many years, especially in hydropower and petroleum. Again – in Angola, the demand for Norwegian suppliers and partners is likely to increase. Statoil is actively seeking international opportunities in offshore and deep-water development projects, and is an operator in several countries south of the Sahara.

Norwegian companies also have comparative advantages in clean energy production. We have been exploiting hydropower resources for more than a century. There are currently 850 hydropower plants on Norwegian soil, and they produce almost 100 % of Norway’s electricity. Ethiopia, Uganda and Mozambique also use hydropower – and Norwegian partners are involved there.

The maritime sector and the fisheries are other areas where Norway possesses highly relevant expertise – and has the capacity to engage in activities in Africa. In agriculture we have companies like Yara – a world leader in fertiliser production.

In sum, there is great scope for Norwegian companies to do business – to do more business – in the rapidly growing African markets.

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Foreign investment can – when well executed – contribute substantively to develop the economy of less developed countries. At the same time, let us not forget that foreign investors, in particular in extractive industries such as petroleum and mining sectors, too often operate in enclosed enclaves, where investments do not boost value creation, productivity and employment locally.

Developing countries should therefore ensure that foreign investment results in greater local expertise and locally owned businesses. More and more countries are already imposing strict local content requirements on foreign companies. These may for example limit the use of foreign labour, or stimulate the use of local suppliers of goods and services to enhance the economic effect of investments.

Now, returning to my own country’s recent history and experiences. A hundred years ago Norway was a poor country in Europe. When petroleum was found off Norway’s shores in the 1960s, we focused on building a model that would encourage foreign capital and investment while ensuring local Norwegian content at the same time. More than 40 years later, the oil and gas sector is a vital part of the economy in Norway. It provides employment and has encouraged the growth of a wide range of jobs and a local supply industry. The petroleum industry is involved in innovation, technological development and research, education and training. It has become a cutting edge industry that leads the technological development in Norway. However, more importantly, the wealth has been redistributed, the income from oil and gas has been inclusive, and the Government’s policy has aimed at equal distribution – equality – and “inclusive growth”.

The private sector has always been the engine that drives the creation of productive capacity, jobs and income – as well as the improvements in welfare. These developments can only be achieved through inclusive growth that reaches the general population in poor countries. Norway’s aim for private investment is to promote development in the host country.

The Government also expects Norwegian companies to exercise corporate social responsibility, both at home and abroad. This means that they should adhere to international best practice as regards the protection of human rights, environmental considerations, decent working conditions, transparency and avoid all forms of corruption.

Companies are expected to respect workers’ rights – particularly the ILO core conventions – to maintain good social, environmental and governance standards, as well as to pay decent wages. They must of course always comply with national legislation, but if this is weak, companies are expected to apply internationally recognised standards.

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I must admit that trade between Norway and Africa is today till very, very small in volume. Our exports to Africa are not particularly impressive – with a few exceptions. And imports from African countries to Norway are almost non-existent today – except for flowers and some vegetables, as I mentioned.

This is a complex challenge. It is a long way to go. It is currently very difficult for African countries to gain entry to the European market because they find it difficult to meet our strict quality and health and safety requirements.

Under the Generalised System of Preferences, lower tariffs are granted for imports from developing countries, in order to promote development. The least developed countries are granted duty-free, quota-free market access in Norway for all goods including agricultural goods. In 2008, this regime was extended to 14 other low-income countries. From 2013 it will be expanded even further to include all low-income countries with a population of less than 75 million.

Developing countries need to improve standards and build up trade-related skills and infrastructure in order to increase their exports to Norway and other countries.

Norway provides support through various channels to help developing countries in this work.

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In sum, we need to be aware of both the possibilities – and the many challenges Norwegian companies face when investing in Africa.

These can include a poor business environment, weak infrastructure, low levels of expertise and production quality, and markets with little purchasing power for the moment and a weak export capacity.

As a result, most private investors often consider investment in the poorest countries to be a high-risk undertaking.

Governments can attract more international investors by increasing transparency and providing more predictable framework conditions.

The Norwegian Government would like to see a significant increase in the level of investment in poor countries. This is our overall objective. Therefore, we are encouraging Norwegian businesses to move into in these emerging markets. Such investments should – of course – primarily be motivated by commercial interests.

Norway’s embassies abroad, as well as Innovation Norway’s local offices (which currently only has one office in Africa, located in South Africa, is exploring the scope for opening more offices) assist Norwegian businesses in various ways. Among other things, they may function as “door openers” to facilitate access to decision makers. The foundations INTPOW and INTSOK also provide considerable support for Norwegian businesses in areas such as renewable energy and petroleum. And Norfund’s regional offices in Kenya and South Africa provide useful information about regional and local markets.

The Norwegian Government wishes to further strengthen the capacity of the Foreign Service to provide relevant and high quality assistance to the private sector. A project is now under way to look specifically at how we can do this, focusing on countries where Norway has been present for years. The project involves the Ministry of Foreign Affairs, the Ministry of Trade and Industry and Innovation Norway.

Last year, the Norwegian Minister of Trade and Industry and the Minister of Environment and International Development travelled to Ghana, Angola and Mozambique together with a business delegation of almost 100 people. The objective was to strengthen private sector engagement and cooperation with these African countries.

The Government intends to organise more political visits to African countries, focusing on emerging markets and business opportunities.  

In sum, ladies and gentlemen, to conclude:

We see a global development; Africa in focus. Our image of Africa is quickly changing. A development from aid to trade, and there are many success stories.

We have now established an increased focus in Norwegian foreign policy – and our development policy and foreign trade policy) on the developing or emerging markets.

I wish you all a fruitful conference. Thank you.