Ebola fear factor threatens to dampen African business buzz

JOHANNESBURG Thu Aug 14, 2014 11:24am EDT

Nigerian custom officers wearing face masks and gloves screen passengers arriving at Nnamdi Azikiwe International Airport in Abuja August 11, 2014. REUTERS/Afolabi Sotunde

Nigerian custom officers wearing face masks and gloves screen passengers arriving at Nnamdi Azikiwe International Airport in Abuja August 11, 2014.

Credit: Reuters/Afolabi Sotunde

JOHANNESBURG (Reuters) - From Accra to Windhoek, fear of the Ebola epidemic is provoking a wave of cancellations of business and investment events across Africa, and threatening to taint the continent's hard-won image as a rising economic star.

A canceled visit by Brazilian executives to Namibia typifies the problems of perception raised for African countries which are remote geographically, economically and culturally from those suffering the outbreak in a corner of the continent.

The Namibian capital, Windhoek, lies about 4,500 km (2,800 miles) from the outbreak's West African epicenter - far further away than at least one major Brazilian city and scarcely any closer than Rio de Janeiro. Yet the delegation still called off next week's trip to southern Africa due to pressure from families and employers.

"We're so far from West Africa," said an employee of Namibia's Chamber of Commerce and Industry which was hosting the Brazilians. "Did these people not have a map?" grumbled the staffer, who asked not be named.

The outbreak, declared an international health emergency by the World Health Organization, has killed more than 1,000 people and ravaged the small, fragile economies of the three worst-hit states, Liberia, Sierra Leone and Guinea.

The disease also has a toehold in oil producer Nigeria, Africa's biggest economy, and concerns that the world's least developed continent may struggle to limit its spread could cool a recent surge of investor interest.

Ebola is spread only by direct contact with bodily fluids of infected persons. But even when logic suggests the risk is low, negative perceptions about the disease can make visitors and would-be investors pause over their travel and commitment plans.

"These kinds of perceptions do matter, particularly when we're talking about markets which people really don't have a good sense about," Amit Khandelwal, a professor at the Columbia Business School, told Reuters.

Despite the absence of any confirmed cases in East Africa, Korean Air Lines Co Ltd suspended flights to and from Nairobi on Thursday, citing Ebola.

Africans often blame outsiders' failure to understand how vast and diverse their continent is for holding back investment.

But some of the precautions are being made by Africans themselves. In Accra, the government has announced a three-month moratorium on international conferences "which have the potential of spreading the Ebola Virus".

Ghana has been a favorite among investors in frontier markets - those which are at an earlier stage in their development than the more established emerging economies.

Other cancellations, postponements or venue shifts include an Association of African Central Banks meeting in Equatorial Guinea this month, a gathering of land surveyors in Lagos, Nigeria, and a managers' meeting of chocolate maker Barry Callebaut scheduled in Ivory Coast.

Economists say it is too early to estimate how much Ebola and its consequences will dent Sub-Saharan Africa's economic growth, forecast by the IMF at 5.5 percent this year, but damage seems inevitable.

"If it spreads rapidly in Nigeria, I think that's going to be a much bigger issue because of the density of the population there, the size of the country," said Khandelwal, who focuses on international trade and investment and emerging markets. Nigeria is fighting to contain its Lagos outbreak.

Reflecting the alarm, a Nigerian oil company executive told Reuters he had temporarily moved himself and his family to London. A partner in an environmental management company said Chinese expatriates he had recruited were refusing to come. Neither wanted to be named.

"AFRICA IS NOT A COUNTRY"

Besides the blow to business activity, some see the epidemic as rekindling negative stereotypes about Africa, which the continent had been shaking off in recent years as more foreign investors woke up to its growing consumer population and untapped markets, to add to longstanding mineral wealth.

"Poverty, war and disease, those were the kind of three planks of the darkest Africa narrative and in a way this has revived a little bit of that," said Dianna Games, CEO of Johannesburg-based consulting company Africa@Work, told Reuters.

Games said the outbreak in one of the poorest pockets of Africa, still scarred by civil wars, highlighted persisting development problems, but the risk of its spread through increased travel was also a sign of progress.

"The movement of intra-African trade and people is massive. People are flying in and out of Africa," she said. "Globalisation is what makes it scary."

Tarah Shaanika, CEO of Namibia's Chamber of Commerce and Industry, said he found "offensive" the ignorance of Africa's size and diversity being demonstrated over Ebola. "People must understand Africa is a continent, not a country," he said.

During a summit of African leaders hosted by U.S. President Barack Obama in Washington earlier this month, some bridled at questions about Ebola. "It is not an African sickness," said Senegal's President Macky Sall, calling the outbreak an international threat and saying the response should be global.

"YOU HAVE TO BE OPTIMISTIC"

Before the onset of Ebola, Africa investors were already having to select the most attractive markets from a diverse group ranging from economic successes - such as Rwanda, and emerging Ivory Coast - to less stable places such as newly-born South Sudan, Central African Republic or the Sahel countries on the southern rim of the Sahara.

Each is varied within itself. Nigeria, which overtook South Africa this year as Africa's biggest economy, still offers lucrative business to international retailers and other investors despite an Islamist insurgency in its north which has killed thousands this year and generated months of negative headlines through a mass kidnapping of schoolgirls.

Games believes Africa, one of the world's fastest-growing continents, should be resilient enough to shake off the taint of Ebola. "The fundamentals pushing this 'Africa Rising' narrative are still there. We're talking the rising middle class, we're talking growing consumer populations, urbanization, political reform etc. Those things are still in place," she said.

"Business opportunities will win out in the end," agreed Charlie Robertson, Global Chief Economist at investment bank Renaissance Capital, who has co-authored a book on Africa's "economic revolution". He has predicted the region's economy will grow from $2 trillion in 2012 to $29 trillion by 2050, greater than the output of the United States and euro zone.

"You have to be optimistic about Africa," Senegal's Sall said in Washington this month.

(Additional reporting by Daniel Flynn and Emma Farge in Dakar and Tim Cocks in Lagos; Editing by David Stamp)

Recommended Newsletters

Reuters U.S. Top News
A quick-fix on the day's news published with Reuters videos and award-winning news photography and delivered at your choice of one of four times during the day.
Reuters Deals Today
The latest Reuters articles on M&A, IPOs, private equity, hedge funds and regulatory updates delivered to your inbox each day.
Reuters Technology Report
Your daily briefing on the latest tech developments from around the world from Reuters expert tech correspondents.