The Chasm of Unmanageable Risk: Why Foreign Direct Investment in Africa is so Challenging

Back in 2003 I developed a conceptual model for some of the challenges associated with investment in Africa.  Here is a summary:

Ignorance (on the part of the potential investor)

• Business Environment
• Legalities
• Culture

Workforce Challenges

• Education Levels
• Types of Education (wrote vs. critical thinking)
• Lack of Experience

Communication Challenges 

• Language(s)
• Infrastructure deficiencies (ICT)
• Worldview differences

Corruption

• Systemic
• Other

Part of the solution to mitigating risk is understanding it.  Strategies can be applied to each of these risk areas.  Business development and FDI into productive sectors are essential for development in Africa.  Philanthropy is good (although not in all cases) entrepreneurship and investment are better.