Africa is the last frontier for global investment, and beverage companies in particular are moving in quickly. One of them is Coca-Cola, which has long used its distribution network to help deliver medical supplies in countries such as Ghana and Tanzania. Now the company promises to invest an additional US$5 billion in sustainable development projects through the end of this decade.
By several estimates Africa has six or seven of the world’s 10 fastest growing economics, so Coca-Cola’s focus on the continent should not be surprising. Its largest competitor, PepsiCo, has also ramped up investment in Africa, and brewing companies also have their sights on Africa due to its growing middle class and untapped marketing potential. Before these purveyors of fizzy drinks and beer can entrench themselves in these markets, however, much work needs to be done.
To that end, Coca-Cola’s new round of investment will tackle a bevy of challenges prevalent throughout Africa. In addition to new bottling plants, updated equipment and training, Coca-Cola has promised programs to tackle some of Africa’s social and environmental problems. The company says it will develop initiatives that will improve safe water access, women’s economic empowerment and “sustainable sourcing” programs.
It behoves Coca-Cola and its peer companies to take on such an agenda for two main reasons: economic security and social responsibility. One of the biggest challenges to investing in Africa is the country’s infrastructure, which can stand in the way of reliable manufacturing and distribution. Plus the local population needs to be trained to ensure the company has a market that makes it possible to buy and sell their products — not too different from what technology firms face in Africa. And then there are the local sensitivities. A company that wishes to use water in a region where far too many people struggle to gain access to it has got to ensure all can tap into this resource. Boosting local agriculture can also ensure local populations have more stable sources of food while companies also have a reliable supply chain. With advocates increasingly louder and more consumers aware of the “global land grab” occurring across the world, especially in Africa, multinationals must ensure they are partners in this region, not exploiters.
Coca-Cola insists its development efforts in Africa, which in total will reach US$ 17 billion by 2020, will address all of these problems. The launch of one program, Source Africa, intends to partner with small farmers to ensure food security while guaranteeing local ingredient sourcing. The company also says it will expand its commitment to its Replenish Africa Initiative (RAIN) with the goal to triple the number of citizens who gain from safe water access and sanitation — and says the programs’ reach will extend into 37 of Africa’s 55 nations. In sum, like many of these programs we hear about, the list of Coca-Cola’s promises is long. What will really matter is how the results will bear fruit in a region with much potential that has suffered far too much disappointment.
Image credit: Coca-Cola