JOHANNESBURG. Whats an embassy for? Should it primarily pursue governments foreign policies or to be a service institution for citizens and companies? How does it deliver value? Are there better options to promote a countrys corporate interests?
The issue was brought to life earlier this month in Sweden when Africascan broke a story that Swedish telecom manufacturer Ericssons CEO Carl-Henric Svanberg had urged Swedish foreign minister Carl Bildt in a letter not to close embassies in emerging markets but instead help Swedish companies to increase market shares.
Svanberg made a particular reference to Angola where the government had plans to close the embassy, which Svanberg thought would threaten potential contracts for Ericsson and other Swedish companies. Bildt defended his turf in a follow-up interview by business paper Dagens Industri where he expressed the view that Ericsson surely had shown that it was perfectly capable of selling equipment without Swedish governments molly-coddling it. He correctly implied that Swedish embassies are badly equipped to do corporate sales stuff.
A few days later the government predictably announced that it would close down in Angola, together with embassies in Laos and the Philippines, while it instead announced new embassies in Khartoum, Kabul and Minsk. Other embassy closures were announced last month: Nicaragua and Botswana. Last year Ivory Cost and Namibia faced the chop.
There is no single reason for Sweden to play a embassy musical chair game at Africas expense.
There is a general dictate to save SEK 70 million from the Swedish Foreign office budget. The overall cost to run Swedens 104 embassies and consulates is about SEK 2 billion. The easiest way to go about, without having to fire staff at home, is to cut back on the number of embassies where the cost per head is calculated at SEK 1-2 million. And to cut back in a number of seemingly peripheral countries in Africa must have been seen as an easy way to go about.
The problem is it is a bad time to ditch old pals in Africa, inopportune even. Africa is faring better than its done for the past four decades. There is even a decent possibility that a number of African countries are about to embark on a life without international aid. In other words, from a business point of view, its time to harvest.
Swedish trade with Africa has doubled over the past three years Swedish investment is also growing.
Its not just that Swedish companies are growing from a low base; in Ericsson’s case Africa represents 10 percent of the company’s sales. That is significant – compare with China’s 7 percent.
Even Swedish mutual funds have discovered Africa lately – there are three Swedish Africa funds and we bet that there is more to come.
In the case of Angola the country is a Klondike, it already has massive growth, more than 20 percent annually thanks to booming oil export.
Security and stability is a concern of the Swedish government. So why then is it closing in Ivory Coast? The country is crucial for stability in West Africa and arguably Sweden has as good enough reasons to stay put and help out there for similar reasons as in Sudan?
As for Namibia, it is not just a sparsely populated piece of desert but offers a significant trade and energy corridor for Southern Angola, Zimbabwe, Zambia and DR Congo. It can pay for ambitious infrastructure programmes through export of uranium, future gas and energy generation.
Botswana really doesn’t need Sweden, it’s the richest country in Africa, and sure Sweden doesn’t really need Botswana. But the country pulls beyond its size as it hosts SADC’s head quarter; an institution Sweden once was instrumental in setting up.
A new embassy in Sudan. Good idea. As Swedish aid is the fifth in terms of volumes and Sweden is heavily involved in democratization and crisis-resolution in Sudan there is definitely a political and humanitarian need. And economic, Sudan is very much a growing lad, large population, fast growing, oil-economy. Which, we believe is an underlying – classic Swedish double-speak – reason for the decision to set up shop.
Back to the starting point. There are no clearcut answers, except that an embassy naturally must represent the country, people and business. Not just the government at hand, and its particular side interests.
The crux of the matter is that there are different strokes for different folks. In Africa – Botswana, Namibia, Angola – it is suddenly okey to reduce Swedish representation to a one-person office maintained by the Swedish Trade Council, but ultimately paid for by Sida, while in other parts of the world that is completely unthinkable.
As for costs, the saving mentioned in the case of Botswana, SEK 12 million, is a pathetic amount from the point of view of the national marketing value, goodwill and contracts that can be generated by a entrepreneurial Swedish representative with diplomatic credentials. Recruit suitable staff and upgrade, take chances, get out there. More than ever that is what is needed. Ask the Chinese.
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