New York Business Consultants LLC

What is it that Africa, the Caribbean and Middle East have in Common?

Advocacy for a diverse economy.

Malko Ebers, New York Jan 26th 2014

Comparing economies as different as the Caribbean, Africa and the Middle East that sounds like an impossible task and pretty arrogant statement. Yes and No! I'd like to contribute to the discussion what these three huge marketplaces have in common, why this is important to know and how this might relate to your business.

Africa, the Caribbean and the Middle East in large part are all still very dependent on a few business sectors, their economies are often not well diversified. This matters because it creates big dependencies and it gives young entrepreneurs few choices. 

Africa in large parts is still very dependent on mining and commodity exports and the prices are set on world markets. If you look at the supply chain for cocoa, coffee, oil the money is made usually not at the production site in the country but later. The value is added and the profitability is higher when technology is added. This technology and (foreign) direct investment is often missing in Africa. How can it be that one of the oil richest and resource richest countries on earth Nigeria has to import gasoline? Because there is no refinery and people have to wait in line at gas stations pretty often in a country that should be blessed with abundant natural resources. Another example is Guinea in West Africa where bauxit mining & the aluminum industry provide a staggering 80 & of the countries foreign reserve and where agriculture still employs about 80% of the countries workforce. These structures are often not sustainable because not much knowledge, technological skill spreads, it provides little incentive for creativity and entrepreneurship and the generated income typically doesn't reach the majority of the population. 

In the Middle East with some notable exceptions we still have strong dependencies on oil exports and the generated wealth, concentrated at the top of clan structured autocratic regimes is used for tax and other subsidies - the political and the economic structure are very much intertwined and the 'end of oil' and of easy money is very much threatening the power structures and political stability. 

The third economy that I would like to briefly discuss is the Caribbean, one of the most beautiful places on the planet blessed with sunshine, tropical islands and some of the most impressive tourist resorts that were ever built. However the extreme dependence on tourism and offshore banking in most parts of the Caribbean creates very strong dependencies and makes the economy vulnerable to external shocks - such as 9/11 when int. tourism declined and int. banking became more regulated, storms and nature in general. 

All three regions discussed from Africa to the Middle East and the Caribbean see an enormous brain drain, their best and brightest people study, live and start businesses in Europe and America because the political stability, infrastructure, high speed internet and technology and the vast market of consumers very much supports all their creative ideas and talents. If you are a young graduate and your only realistic job chances are in tourism or working in mining or on an oil field then you might very well emigrate which is exactly what large proportions of you entrepreneurs do. Meanwhile many governments and institutions are realizing that a diversification of their economies, improvements in governance, fighting corruption, improving infrastructure, improving education and research and nurturing the entrepreneurship sector keep their talent and retain new ones. The IT revolution, near sourcing and outsourcing, access to global education, access to best practices in business, regimes that allow greater mobility of capital and goods support these efforts.

We are at the beginning of a global area of entrepreneurship, we see amazing talents all over the world working on a more fair, more collaborative and democratic form of doing business. We can and are collaborating worldwide on projects and we are living in a world where a good idea knows no borders. Governments and other bodies of society do well to embrace and support this groundbreaking transformation towards a more diversified, more global and collaborative economy.