This publication should be cited as: Ruël, H. 2014. How African countries need to get on with the business of diplomacy. GREAT Insights, Volume 3, Issue 3. March 2014.
African countries are an attractive business destination for business and governments from developed and recently emerged countries. This is a result of Africa’s recent economic rise, despite some ongoing violent conflicts. For sustainable growth and development however, Africa needs to avoid earlier pitfalls and professionalise its economic and commercial diplomacy in order to match the skillful business and government representatives from Asia, the United States (US) and Europe and broker deals and agreements that benefit Africa in the long term.
Africa’s changing trade partners
Africa as a continent has become a major target for businesses and governments from the US, Europe and Asia with whom to do trade. For a long time, Africa has already offered opportunities for natural resources that developed economies need, but today Africa offers great opportunities for new market development. Especially since more and more African countries are joining the list of emerging economies.
The new global economic power balance has its impact on decision-making processes in bilateral and multilateral bodies. For African countries it means that Europe is no longer a major economic power to do business with. Asia, and in particular China, has emerged as one of Africa’s main trading partners (1), although not without critique. In 2013 the New York Times published an article revealing that a number of African countries are trying to untie themselves from the Chinese dominance in their economies, partially because of relative poor ‘ deals’ and ‘returns’ from the Chinese side for African resources.
Over the past decades many African countries have struck deals with Chinese firms and the Chinese government, in order to secure natural resources. But Western governments and firms have done their part as well.
The slightly unthoughtful and unnuanced way of dealing with firms and governments from outside Africa and the problems that it brought are a clear signal that African countries need to work on their economic and commercial diplomacy. Now that it seems to become the age of Africa, despite a number of sadly very violent and unstable situations in some countries such as Central African Republic or South Sudan, it is time for African governments and businesses to professionalise their economic and commercial diplomacy competences in order to secure and negotiate better deals, to become self-aware and become more aware of what Africa has to offer.
Improving and professionalising economic and commercial diplomacy competences involves professionalising the competences of actors in government bodies and in business. It also requires organising the network of government and business actors in an efficient and effective way. It may mean that the foreign diplomatic networks have to be restructured in order to turn economic departments at embassies abroad into business focussed units, that can also help African firms to enter markets in the US, Europe and Asia.
Leading from the top on commercial diplomacy
One of our recent studies (2) revealed that the large majority of foreign ambassadors based in The Hague do not have business experience, but have worked for the government for most of their career. Ambassadors who did have business experience spent more time on commercial diplomacy than those without.
On the various occasions that I was invited to train young diplomats mainly from Africa and Asia on commercial diplomacy, I noticed that this side of diplomacy was not yet in their sights and not very much considered as a core task for their future careers.
Over the past decade many countries in Europe have started to restructure and refocus their foreign missions and put economic and commercial diplomacy at the top of their foreign policy agendas. Another study (3) on the future of commercial diplomacy among a group of diplomats from mainly OECD (Organisation for Economic Co-operation and Development) countries showed that commercial diplomacy is very likely to become more and more important.
Interesting as well is that in a comparative study (4) on commercial diplomacy between the European Union (EU) member states, it appeared that the ‘young’ EU member states (and most often the so-called transitional economies in central and eastern Europe) were more pro-active in their commercial diplomacy than their ‘old’ counterparts. This may be considered as a sign that the transitional economies in the EU understand the need for internationalisation of their economies.
For African countries it is time to do the same, and put economic and commercial diplomacy high on the foreign policy agenda, to professionalise and innovate economic and commercial diplomacy. This will serve African countries to be strong partners for business and government representatives from Europe, Asia and the US in negiotiating business and development deals, at least agreements that serve both parties equally.
Commercial diplomacy intelligence
Professionalising commercial diplomacy means having foreign ministries and ministries of trade that are manned with well trained staff whose competences match with those of international business representatives. It also means staffing the diplomatic networks abroad with human resources that possess the competences needed for today’s global economy, and by ambassadors with a business focus.
A full service commercial diplomacy is capable of conducting network activities, intelligence, image campaigns, and business support. Network activities entail developing business and government contacts, carrying out state visits/delegations, organising and participating in buyer-seller meetings, matchmaking, partner research and developing a personal business network. Intelligence means pro-actively gathering and disseminating commercial information and conducting market research, reporting about business climate and opportunities to the home country, being able to be a consultant to the home and host country partners, conducting country image studies, and establishing joint research projects. Image campaign activities consist of promoting home country business, participating in trade fairs and supporting potential home country exporters, sensitising potential foreign investors, promoting tourism, and conducting awareness campaigns. Business support activities involve contract negotiation support to home and host country businesses, contract implementation support, and problem solving support. It also involves gathering export marketing data, supervision of intellectual property rights and contracts, advocacy, and coordination of legal actions.
An effective, full service and mature commercial diplomacy requires an efficient division of tasks and responsibilities between the ministries of foreign affairs and trade, as well as among the different actors in the foreign diplomatic service. It also requests a smooth collaboration.
Furthermore, choices can be made in providing commercial diplomacy via public actors only, or via a combination of public, private and semi-public actors.
Many African countries may feel that they lack the financial resources to upgrade and innovate their commercial diplomacy. However, professionalising and innovating commercial diplomacy should be considered as an investment rather than as a cost. A well functioning foreign service with a business focus is value for money. Several studies have shown that the resources spent on economic and commercial diplomacy are well spent in terms of returns on investment. In the case of Africa, commercial diplomacy should bring trade agreements, investments and international business that are the basis for sustainable growth and development.
It is high time for African countries to become aware of their potential and attractiveness for business and governments from the US, Europe and Asia, not only for natural resources. But it will need foreign policies with commercial diplomacy high on the agenda and with commercial diplomacy competences and structures that can compete with and match those of Europe, US and Asia.
Huub Ruël is Professor of International Business at Windesheim University of Applied Sciences, The Netherlands.
1. Africa and the Chinese way. New York Times, December 16, 2013.
2. Abbink, G.J.M., Ruël, H.J.M., Van der Kaap, H. 2014. Involvement of Ambassadors in Commercial Diplomacy. Master thesis. Enschede/Zwolle: University of Twente/Windesheim University of Applied Sciences.
3. Kosters, M.J., Ruël, H.J.M., Stienstra, M. 2013. The future of commercial diplomacy. Master thesis. Enschede/Zwolle: University of Twente/Windesheim University of Applied Sciences.
4. Stadman, A., Ruël, H.J.M. 2012. Competitors or collaborators: a comparison of commercial diplomacy policies and practices of EU member states. Emerald Advanced Series in Management, 9, 183-225.