US investors can find good deals in Africa and not leave all the action to the Chinese. How? By taking the long view, and aligning their investment strategy with countries’ development priorities.
For example, Ghana has launched an initiative that links the obvious need for better infrastructure with the goal of industrializing the economy, with a sovereign wealth funds to back it up. Implementation requires billions in investment and technical assistance, largely from the private sector. Here’s how US companies can win business:
- Adopt a long term perspective. These are long term projects intended to transform Ghana’s economy and enable high value industry to thrive. The benefits to investors and operators are also long term in the form of offtakes that will continue well into the future. These benefits easily overwhelm concerns about currency fluctuation, or bureaucratic challenges.
- Make your presence known on the ground. Brazilian and Chinese investors send teams to explore the market even before any bid announcement or call for investors. Email and social media have their limits. You have to go there!
- Identify a local partner. Successful teams almost always include a local private sector player as a joint venture partner. There are consultants based in the US and abroad who can provide leads for good JV partners.
- Bring a complete solution. A complete solution brings financial and operational capabilities—someone to finance, build and operate. It also includes service, maintenance and training. Infrastructure giants like GE often have such capabilities in-house. Asian and European operating companies often have government backing. US investors should think in terms of assembling a consortium that includes these elements. A private equity shop or investor group, needs an operating partner. A builder or contractor, needs a financial investor able to provide capital. Agencies like OPIC and EXIMBANK can help manage risk.
- Identify skilled, knowledgeable advisors. There needs to be someone who understands the local environment, but also understands the priorities of a US-based investor.
In cases like Ghana, the projects are structured with offtake and other cash flow sources clearly identified. The Ghanaian government is prepared to help with advice and seed money via the sovereign wealth fund. Lots of guidance and support are also available in the US from government and private sources. This should be a win for US investors, and for the emerging world once we get in the game in a serious way.