The exit of some multinational corporations from Africa in recent times has continued to make exciting headlines. In most cases, it is seen as a bad omen. Some take advantage of the negative narrative and fashion out of them big sticks to clumber their politicians and political leaders. However, it is not necessarily bad that some multinational corporations are exiting Africa.
I have paid close attention to the role of multinational corporations in Africa, especially from the responsible and sustainable business perspective, for over two decades. These corporations come in various shades, and their relationships with Africa vary. Some are exploitative and parasitic, while others are symbiotic or mutualistic.
The exploitative multinational corporations see Africa purely as a market for grab and run. They are usually footloose and thrive on the placelessness created by globalisation. As such, they are not committed to any place. The only commitment is to profit, and they move or relocate at the slightest push.
In Africa, these exploitative multinationals are usually in the extractive industry – mining and oil and gas –although they can also be found in other sectors. Their interest in Africa is mainly because the bulk of the raw materials and resources they need for their business are in Africa. They would prefer not to be in Africa if they had options, but because their options are limited, they are constrained and compelled to deal with Africa.
They hardly invest in research and development and local knowledge transfer in their host countries because they do not have any long-term commitment. Their commitment is only as long as they depend on the localised resources. They create only essential jobs and do not bother to innovatively generate extra jobs through their value chains. Most senior roles in the direct jobs they create are often reserved for expatriates, and they treat locals as inferiors.
Because they are compelled out of necessity to do business in Africa, they are often psychologically and culturally distant. They also do not see any incentive to be embedded, as their primary interest is to extract resources and profits from Africa. In that regard, they treat Africa as a host, not a home. Environmental, ecological, and human devastations often trail their operations.
The old quest for oil, as exemplified by the state of affairs in the Niger Delta region of Nigeria, and the new rush for green energy powered by lithium, as exemplified in Namibia, reveal the dark side of these exploitative multinational corporations in Africa.
The parasitic multinational corporations share a lot in common with the exploitative multinational corporations. The main difference is that while the latter quickly leaves, the former stays on as a sponge on the host. This could be through government capture or mere corruption. Because they have perfected their art of capture, they are always in bed with any government in power.
Some have stayed so long in Africa that they have become dangerously indigenised in their ways. Some of them are into commodities, retailing, construction, and services. Sometimes, these parasitic multinational corporations are willing to go down with their host nations and communities. As such, their extended stay in Africa can easily be misconstrued as a commitment to Africa’s cause.
The symbiotic multinational corporations are significantly different from the exploitative and parasitic corporations. Their engagement with host nationals and communities is usually mutualistic. They meet their host where the host is and grow together. Because they are interested in a symbiotic relationship, they invest in R&D and local knowledge transfer. They work collaboratively with the government and host communities as a critical friend.
They genuinely embed themselves in their host nations and communities and see a future of mutual benefits. They are not in a haste to exit at the slightest challenge, but their commitment to shared prosperity remains unwavering on many occasions and issues. They are driven by a strong sense of positive value and vision informed by our shared humanity, where the distinction between host and home countries becomes meaningless. Notwithstanding, they are few and hard to find.
Many African governments are looking for investors and investments. The number of Foreign Direct Investments a country can attract has become a measure of success and performance. As such, all the African countries are singing the same song: we are open for business! However, this song often misses the required quality and type of investments and how these courted investors and investments fit for purpose.
Unemployment, especially youth unemployment, is a big problem in Africa today. Food security and investment in education and infrastructure are also significant problems. I want to argue that Africa needs investors and investments that can help it address these challenges profitably and responsibly. As such, African governments should pay closer attention to existing and potential investors who can meet Africa where Africa is. Often, this consideration is missed in the ostentatious and populist quest to attract any investment that comes our way. This is a flawed strategy and a recipe for disaster.
African governments should be particularly weary of parasitic corporations who are wolves in sheep’s clothing. On a positive note, the exit of foreign firms offers opportunities for African governments to support and develop local firms, which should not be missed.
On the side of the people, whilst it is easy to use the exit of some multinational corporations from Africa as a stick on the back of our politicians and political leaders, it is equally important to reflect on the nature and type of multinational corporations exiting Africa at this point. Are they genuinely committed to Africa? Are they fair-weather friends? Are they in Africa just for their interests?
As much as Africa needs investors and investments, exploitative and parasitic investors and investments are not what Africa needs. Africa needs symbiotic or mutualistic investors and investments. In other words, the government and the people should focus on them in appraising the exit of some multinational corporations from Africa.
In return, it is the collective duty of African governments and citizens to value and reward the multinational corporations who have chosen to stick with them through thick and thin with their customs and other incentives because a friend in need is a friend indeed.
- Kenneth Amaeshi is a professor of sustainable finance at the European University Institute, Italy