By supplying or buying from multinationals, local firms can learn about markets and technology. Such connections are all too rare in Africa, however
Many African governments are keen to attract foreign investment. But its impact hinges on what Albert Hirschman, a post-war economist, called “linkages”. By supplying or buying from multinationals, local firms like Mr Kinuthia’s can learn about markets and technology. Such linkages are all too rare in Africa, however. Many multinationals ship in their inputs and export what they produce. That brings jobs and dollars, but does not spur development.
Extractive industries in particular tend to operate as enclaves. Mining concessions often come with import-duty waivers, says Lukas Bekker, a supply-chain expert who has helped set up mines in three African countries. That makes it cheaper to import equipment than to use local contractors. And buying local can be risky.
The problem goes beyond mining. International supermarkets often truck in goods from distribution hubs—in South Africa, for example—rather than sourcing in the places where they operate. Much of Africa’s coffee, cashew and cocoa leaves the continent in packaging made abroad. Garment-makers stitch together imported fabrics with imported zips and buttons.
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