Africa News blog

Can Africa sustain its economic growth momentum?

Forget the days when the image of Africa in the developed world was one of rolling vistas of unspoilt safari parks, natural disasters and war.

In the last 10 years, western firms and investors have been showing much greater interest, ploughing increasing investment flows into the continent of 1 billion people.

In its World Economic Outlook, the IMF predicts sub-Saharan Africa will grow by an average of 4.7 percent this year, a rate that is second only to Asia.

Africa offers a higher rate of return on investment than any other region in the world, Razia Khan, regional head of research for Africa at Standard Chartered Bank in London, told a Thomson Reuters Newsmaker event this week.

Foreign direct investment has shown strong growth over the last few years, with more than half coming friom Asia in the second quarter of this year alone.

But some investors wonder whether the continent can sustain this kind of growth rate, especially since crises elsewhere in the world, such as the sovereign debt crisis in the euro zone, have prompted a flight of capital to safe havens.

Lack of affordable sources of long-term funds for businesses and corruption can also compound the problems.

Nigeria’s Jonathan flying high

Would you order three new jets just so your successor could use them?

President Goodluck Jonathan is keeping Nigerians guessing as to whether he plans to stand in elections due next January, but suspicions are growing that he will eventually decide to contest.

Plans he has set out range from boosting power supply – perhaps Nigeria’s most critical need – to improving roads. Those are certainly not projects that anyone could complete quickly. On Wednesday, cabinet approved the purchase of three presidential jets at a cost of $150 million – adding to the suspicions he sees himself making use of them.

But there remains the question of Nigeria’s careful ethnic political dance. Jonathan must win over northerners who believe they deserve another turn at the presidency because late President Umaru Yar’Adua, a Muslim northerner, died in office. In another possible sign of Jonathan trying to win favour in the north, he appointed two female opposition members from the region to his cabinet this week.

It can’t be easy for anyone who becomes president to turn down the chance to stay in office – particularly at the urging of supporters constantly assuring you that you can do the job better than anyone else.

Do you see the signs leading to Jonathan staying in office next year? Or could the government be trying to spend what it can in the limited time it may have to run?

Africa optimism rising

When some of the most influential figures in emerging markets finance spoke to a group of Reuters editors, they were asked about top picks for growth beyond the so-called BRIC countries of Brazil, Russia, India and China.

One continent came up again and again – Africa – and one country in particular – Nigeria. Goldman Sachs global head of economic research, Jim O’Neill, highlighted the improvement in the growth-environment index of Africa’s giant over the past decade.

“If it were to show the same increase in its growth-environment score over the next decade, many investors will look back and say why the hell didn’t I invest in Nigeria,” said O’Neill, who coined the term BRICs.

You can read the full story here.

Recent interest in Africa has been buoyed by the World Cup while a series of reports have highlighted its prospects beyond the global crisis. There was a recent McKinsey study and Fitch has come out with an improved outlook for sub-Saharan Africa.

There is certainly plenty of optimism outside the continent. Will it be fully realised this time around?

from Reuters Soccer Blog:

‘You call this noise? What is a million vuvuzelas?’

By Ruona Agbroko

If it hadn't been for Nigeria's goalkeeper Vincent Enyeama, the 1-0 defeat to Argentina could have been much worse for the African side. That is one reason why the Nigerian supporter contingent, even if outnumbered by the Argentinian fans, remained upbeat throught the match.

The green-white-green stripes of the Nigerian flag were seen on toddlers, their parents and even foreigners at Ellis Park Stadium in central Johannesburg.

Jerseys, vuvuzelas, scarves and human faces were appropriately painted in a large outpouring of patriotism from one of the biggest foreign African communities in Johannesburg.

The Dutch coach has banned vuvuzelas, but Nigerians can't understand the fuss.

“You call this noise? This is child’s play! What is a million vuvuzelas compared to the generators we hear 24 hours a day back home?” Laurence Okonkwo said, seconds before his trumpet let out a blast in the ears of an Argentinean.

The Argentinean returned the favour.

New Africa about much more than football

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.

If you had put $1,000 in Nigerian or Kenyan stock markets at the start of the year, you would have made a profit of around $150. If you had done the same with the U.S. benchmark S&P 500 index, you would be nursing a loss.

Global fund trackers EPFR reported a 40th consecutive week of inflows to African equity funds this week. India’s Bharti Airtel completed a $9 billion purchase of Zain’s African operations in another vote of confidence in the continent.

“It’s not to denigrate the World Cup for a moment, but it’s not what defines Africa in 2010. What should really be defining Africa is Zain buying Bharti’s assets,” said African affairs commentator Joel Kibazo.

“I think there is still a false image of Africa even in South Africa, never mind the rest of the world, about the rest of the continent. The fact is, it has really been getting ahead and there are more people with money to spend.”

Half of the world’s 10 fastest growing countries will be in Africa in 2011 according to the International Monetary Fund.

South Africa overshadowed by growth of the rest

South Africa’s place as the sole economic giant in Africa is set to decline in coming decades as its growth is outstripped by countries to the north that have emerged as some of the fastest growing in the world.

As part of a package of Reuters reports on Frontier Markets, my colleague Ed Cropley takes a look at the importance for South Africa’s future of positioning itself as a springboard to the rest of the continent.

Although South Africa has been one of the best long term investments in the world over the past century, the next century looks less promising.

South Africa accounted for nearly 40 percent of all economic output in the sub-Saharan region in 2000, according to International Monetary Fund figures.

That share will drop to 28 percent this year, in part because South Africa’s economy was caught in the global recession. It will shrink further as countries such as Nigeria, Ghana and Uganda notch up growth of 7 percent or more compared to the 2.3 percent expansion forecast for South Africa in 2010.

Some South African companies are leaping on the opportunities – MTN, Standard Bank and Shoprite are obvious examples – but others may be slower to catch on.

“South African companies need to wake up. A lot of opportunities are already being stolen from under our noses, and not just by the Chinese — it’s the Indians, the Brazilians, the Russians, the Canadians, Australians,” said Duncan Bonnett, of consultancy Whitehouse and Associates.

Ill health hung over Yar’Adua presidency from start

By Estelle Shirbon

No sooner was Umaru Yar’Adua named in late 2006 as the Nigerian ruling party’s presidential candidate than people started asking whether he would survive four years at the helm of Africa’s most populous nation.

The answer to that question came on Wednesday night, when Yar’Adua died a year before the end of his term — a sad end for a quiet man who had been in poor health since well before he was catapulted into one of the world’s toughest jobs.

I was a Reuters correspondent in Nigeria at the time and I remember the bewilderment when rumours surfaced that outgoing President Olusegun Obasanjo had selected the frail governor of  Katsina, a backwater northern state, as his successor.

To find out more about this little-known figure, I travelled to Katsina in January 2007 to examine his record.

It is an arid state where most people live in shocking poverty and mortality rates for infants and mothers are among the worst in the world. I headed to the general hospital in the state capital to see what was being done to tackle these issues.

The hospital was no better or worse than many others in Ngeria. It was crowded and disorganised, with power cuts, little medical equipment available, too few beds, a dearth of  medication, and wards that looked in need of a good clean.

Yar’Adua death leaves succession wide open

The death of Nigerian President Umaru Yar’Adua is unlikely to plunge Africa’s most populous state into crisis, but it intensifies what was already shaping up to be the fiercest succession race since the end of military rule.

Yar’Adua has been absent from the political scene since last November, when he left for medical treatment in Saudi Arabia, and his deputy Goodluck Jonathan has been running the country since February and has since consolidated his position.

Yar’Adua’s death now piles pressure on the powerbrokers in the ruling People’s Democratic Party to resolve the impasse over who should succeed him.

According to the party’s constitution, power should rotate between Nigeria’s geographical zones, and there is an unwritten agreement that the presidency should alternate between the Muslim north and Christian south every two terms.

The conventional thinking was that should Yar’Adua — a northerner — die during his first term, as has happened, Jonathan — a southerner — would pick a new northern vice president and the pair would finish the unexpired term.

That northern vice president would then stand as the ruling party’s presidential nominee in the next election.

A string of northern names has been bandied around in the media and by political analysts as possible candidates to serve with Jonathan and then run at the next election.

Nigeria. Return of the “Evil Genius”

Nigeria’s former military leader Ibrahim Babangida has made clear his plans to run for president in next year’s election and for “IBB”, a self-proclaimed “Evil Genius”, to take such a decision can only be a sign that he thinks it is in the bag.

If elected, a generation would have passed since he plunged Nigeria into one of its darkest spells by annulling a 1993 election which was widely regarded as fairer than some of the few before and at least some of those since.

That, and accusations that official corruption worsened under his eight year rule, certainly helped to create Babangida many more enemies, but he undoubtedly has many supporters in Nigeria and some fondly recall his time in office compared to the turmoil that followed. (Though it should be said that some in Nigeria are ready to speak in favour of late General Sani Abacha’s dictatorship.)

It could be argued that by returning to office, Babangida would have the chance to correct mistakes of which he himself has spoken.

It could also mean he fulfills an ambition to become an elected president in a way that had become impossible in 1993 when he was forced to step down after annulling the vote widely believed to have been won by his one-time friend Moshood Abiola.

Babangida, 68, has in any case remained a powerful master of behind the scenes politics in the years since he left office and retained as much influence as anyone in Nigeria so a return to the top office might not make that much of a change.

Nigeria has been ruled by military men or former miliatry men for more than 39 years out of nearly 50 years as an independent state and if Babaginda stands he could end up contesting against Muhammadu Buhari, the former military ruler he himself overthrew in 1985 and who came second in the 2007 election.

Oga den dey chop money

When someone tells you “noting shaking” he means all is well — in Pidgin English, the Nigerian lingua franca that is attracting new attention thanks to a Lagos radio presenter.

If someone bumps into your car in the rush hour and you want to avoid the hassle of a police report or even a fist fight, you would simply say: “No wahalah” — “No problem.”

“Wet ting you dey do?” means “What you have done?”

“I de go chop.” means “I will get something to eat.”

“Make una stop dey thiefing abeg.”  means “Stop stealing”

“Oga den dey chop money wello welloo!” means, “Our leaders are very corrupt!”

Pidgin English is the lingua franca for bargaining in markets, taxis and bars in most parts of the country.