Africa News blog
African business, politics and lifestyle
Africa is turning into a fashionable post-crisis investment destination as investors regain their confidence and start to focus on the continent’s lack of direct involvement with the global market’s volatility drivers and trouble hotspots. Africa is benefiting not only from a resumption of international debt and equity flows; it is also a beneficiary of international efforts to maintain the flow of trade finance via multilateral guarantee programmes – 45 issuing banks from 27 countries in sub-Saharan Africa have joined the IFC’s trade finance programme, for example.
At the same time, bilateral and multilateral development agencies are actively investing via an assortment of public and private-sector channels; the international capital markets pipeline is building – sovereign debt offerings on the docket for Nigeria, Senegal, Tanzania, and Zambia with Libya believed to be looking – while the slew of private equity and hedge funds being raised this year for Africa are seeing healthy interest from public-sector and private LPs.
Investors are focusing broadly on Africa’s relative political stability, improving governance, more conducive policy and regulatory environment, as well as more transparent foreign investment regimes. At the macroeconomic level, above-average growth and low levels of government and corporate indebtedness add to the appeal. What’s key to much of the capital flowing into Africa is that it is supplemented by a support network of capacity building, advisory services, training, technology transfer, and infrastructure benefits.
From a sector diversification perspective, the emergence of new technologies such as mobile telephony and Internet broadband are creating interest beyond the traditional natural resource plays; the telecoms and services sector was the dominant Africa FDI recipient in 2009.
Ethiopia’s Prime Minister Meles Zenawi seemed to anticipate this week exactly what a lot people were thinking about his government’s plan to double the poor country’s GDP and wean it off food aid within just five years.
“I think that this is a very ambitious plan,” he said.
“This is indeed an extremely ambitious plan,” a few minutes later.
And, once more for luck, “We have put in place a high-case scenario which is clearly very, very ambitious.”
The first World Cup in Africa also highlights a dramatic change driven by forces more powerful than football.
While the competition may help change Africa’s image in the minds of any outsiders still fixated on cliches of bloodshed and famine, those in the know long ago spotted Africa’s emergence from no-go zone to frontier market and are seeing the returns.
Tom Cargill, Assistant Head of the Africa Programme at Chatham House, writes on the West’s relationship with Africa:
French President Nicholas Sarkozy put it best this week, when he spoke of the increasing important of Africa in Global Affairs: “Africa’s formidable demographics and its considerable resources make it the main reservoir for world economic growth in the decades to come.”
The old image of an Africa doomed to get ever poorer has certainly lost credence over the past decade even if it is a view still held by some.
Well, according to a new study, Africans are getting wealthier more quickly than previously believed and the poorest continent’s riches are also spreading beyond the narrow confines of its elite.
African countries are often being told what they need to do to win more investment and expand their economies, but there is always a question as to whether making the changes will really deliver the rewards.
The lesson from top reformer Rwanda seems to support the argument that it is worthwhile.
President Barack Obama’s decision to end trade benefits for Guinea, Madagascar and Niger shows some stiffening of Washington’s resolve to act against those seen to be moving in the opposite direction to demands for greater democracy in Africa.
But the fact that new benefits were simultaneously extended to Mauritania may also give a lesson in how would-be coup makers should best behave if they want to get away with it.
World Bank President Robert Zoellick ended a visit to Africa this week with the pronouncement that this century belonged to the continent’s development despite damage to economies from the global financial crisis.
Those who remember what were flagged by some at the time as “Africa’s decades” in the 1980s and 1990s may have cause for scepticism given that in many countries they turned out disastrous despite early hopes.
Poor South Africans have called upon newly elected president Jacob Zuma to keep his election promises on service delivery. The past week has seen a number of protests flaring up across South Africa against what protesters called poor service delivery.
In one township in the country’s Mpumalanga province residents barricaded the entire township, burning tyres, throwing stones at policemen and calling for the head of the local mayor, whom they described as “good for nothing”. “There is no development. You can see for yourself,” one resident told journalists. He spoke of alleged neglect and apparent self enrichment from local government officials.