A draft report to be presented at the AfDB’s annual meeting in Morocco later this month shows net resource outflows from Africa totaling up to $1.4 trillion over the 30-year period to 2009, far exceeding inflows to the continent.

Illicit financial flows were “the main driving force” behind $1.2-1.3 trillion of the three-decade net drain, it said.

This is about four times Africa’s current external debt and almost equivalent to its current GDP.

“The trend is continuing, it could even be increasing,” AfDB Chief Economist Mthuli Ncube said in a phone interview. Figures for the period since 2009 were not yet fully available.

“We need to block the leakage … It is holding back Africa’s lift-off,” he added.

The report, by the AfDB and the Washington-based advocacy group Global Financial Integrity and made available to Reuters, called for anti-corruption agencies and laws, and mechanisms to combat money-laundering, to be reinforced and for government budget processes to be made more transparent.

The illicit outflows between 1980 and 2009 were often linked to the extraction of oil and minerals and covered criminal activities like money-laundering, tax evasion and transfers from corruption, kickbacks and contraband, the report said.

But they also included what the report called “mispricing of trade” – for example, opaque business deals negotiated with local authorities which flout or ignore existing legislation.

The study on illicit transfers comes as the world’s least developed continent experiences an economic growth surge, outpacing global averages. The World Bank and IMF see Sub-Saharan Africa’s GDP accelerating to over 5 percent in coming years, driven by investment and high commodity prices.

“This is the poorest region in the world and that is why we are shining a torch on this … Africa needs these resources more than any other region,” Ncube said, adding, “There is a lot to lose if nothing is done.”

(Editing by Ron Askew)

Consumer demand is a motor of Africa’s economic and investment surge, and analysts see middle class buyers with swelling disposable income as fuelling this boom from South Africa to Nigeria and Kenya.

In its Africa Pulse report last month, the World Bank said consumer spending accounted for more than 60 percent of Sub-Saharan Africa’s buoyant economic growth, which it forecast would accelerate to more than 5 percent over the next three years, far outpacing the global average.

“It’s probably the fastest growing consumer class in the world, as a region,” said Michael Lalor, director of Ernst & Young’s Africa Business Center in Johannesburg.

From mobile phones, cars, food, and clothes to financial services and entertainment, multinational companies are homing in on lucrative new markets as millions of Africans aspire to claw their way out of still widespread poverty.

“The poor don’t drive demand in an economy, it’s the middle class that drive demand in an economy,” African Development Bank Chief Economist Mthuli Ncube told Reuters.

“Reducing poverty means creating a middle class. Sometimes people think pushing the middle class means forgetting about poverty, but it’s the other side of the coin,” he added.

Global demand for African commodities, driven by China, has also boosted economic growth along with strong investment in productive industries and infrastructure. The World Bank forecast foreign direct investment in Sub-Saharan Africa will reach $54 billion by 2015, up from $37.7 billion in 2012.

At the same time, a greater number of African countries are achieving relative stability in politics and economic policy, allowing the middle class to emerge.

Accurately quantifying this African middle class has become an obsession for institutions such as the African Development Bank (AfDB) and World Bank, as well as consultancies advising corporate clients seeking an edge in this booming continent.

But this is a challenging task in a very diverse region – still the least developed on the planet – where reliable data is patchy and whose more than 50 economies range from regional powerhouses South Africa and Nigeria to U.N. Development Index laggards such as Niger and Mozambique.

A CONSUMING CLASS

“There are elastic definitions … The middle class is very different in Kenya, for example, where you need far less disposable income than you might need in the United States,” said Ernst & Young’s Lalor.

One of the most frequently quoted – and debated – studies is a 2011 report by the African Development Bank. This said that, based on a daily per capita consumption definition of $2-20, Africa’s middle class had risen by 2010 to 34 percent of its population – or nearly 350 million people – from about 126 million or 27 percent in 1980.

Given that $2 a day or below is widely accepted globally as a poverty indicator, many economists see the AfDB’s middle class range, as cited in its 2011 report, as too broad and optimistic.

Standard Bank economist Simon Freemantle says other studies indicate a more “African-appropriate” measure of middle class level income of between $15 and $20 a day. “There, Africa’s middle class would be closer to 120 million, out of a population of just over a billion, so roughly 10 percent,” he said.

Citigroup’s Africa Economist David Cowan preferred not to use the term “middle class” at all in relation to Africa. “I don’t believe there’s an African middle class,” he said, when compared with Europe or Asia.

Cowan would rather speak of a rapidly expanding “huge consuming class”, with ideally $5,000-7,000 of disposable income a year ($14-19 a day).

“That’s a level at which people can really make consumer purchases … middle class in my mind should able to afford a washing machine and go out and buy a motorbike,” he said.

“DRIVERS OF DEMOCRACY”

Few doubted that the emerging middle class was an important group for defining Africa’s economic and political course.

As keen users of mobile phones and the Internet, including social media networks, they were plugged into the digital world and international news and therefore had a role as opinion makers and agents of reform and change.

“The mobile phone in Africa is creating a politically conscious class,” said Cowan, citing Kenya’s election in March.

Many analysts believe digital media played a part there in keeping tribal tensions in check during the vote and allowing a generally peaceful poll which averted a repeat of post-election violence that killed more than 1,200 people in 2007/2008.

Middle class voters are seen more likely to vote according to policies and issues rather than automatic or traditional allegiances to any party or ethnic group.

AfDB’s Ncube believes the better-educated are supporting a perceived and widening trend towards more democratic maturity and better governance on the continent.

“They are your enlightened voters, they will support policies, and not just an affiliation emotionally,” he said. “They are drivers of democracy.”

Reflecting change in post-apartheid South Africa, recent research by the University of Cape Town Unilever Institute of Strategic Marketing shows the black middle class there has more than doubled in eight years to 4.2 million in 2012, and its annual spending has overtaken its white counterpart group.

“The growth in this country, both economically and certainly in terms of spending power, comes from the black middle class,” Unilever Institute Director John Simpson told Reuters.

He said the ANC government, which had long focused on the poor masses as its core voting base, was now being forced to pay more attention to the black middle class – which it has also helped create through affirmative action policies.

But even if one accepts the AfDB’s broadly inclusive figure of around 300 million in the African middle class, chief economist Ncube says at least half these people do not enjoy real economic security.

“That 150 million between $2-4 a day, it’s very vulnerable, it could slip back any time into poverty,” he said.

Political and economic shocks, such as conflict, unrest or upheaval, could also have a heavy impact on the livelihoods of lower-earning middle class members, Ncube added.

“Naturally, the closer you are to $4 (a day) … even just a small lift in food prices, and that group immediately becomes vulnerable,” said Freemantle.

(Editing by Ed Stoddard and David Stamp)

In its latest Africa’s Pulse analysis of prospects for the region, the bank saw increased investment, high commodity prices and a pick-up in the global economy driving this expected growth surge in the world’s poorest continent.

It said foreign direct investment (FDI) inflows to Sub-Saharan Africa were projected to increase to record levels each year over the next three years, reaching $54 billion by 2015.

This compared to $37.7 billion in 2012, a 5.5 percent increase in a year when FDI flows for developing countries fell on average by 6.6 percent, the bank added.

The Washington-based multilateral lender predicted Sub-Saharan Africa’s growth would be 4.9, 5.1 and 5.2 percent for 2013, 2014 and 2015 respectively.

In 2012, the region’s growth was estimated at 4.7 percent.

“If properly harnessed to unleash their full potential, these trends hold the promise of more growth, much less poverty, and accelerating shared prosperity for African countries in the foreseeable future,” said Punam Chuhan-Pole, a lead economist in the World Bank’s Africa department.

Compared with Africa’s expected growth spurt, global GDP was projected to expand by 2.4 percent in 2013 and gradually strengthen to 3 and 3.3 percent in 2014 and 2015.

The report said a decade of strong growth had reduced poverty in Sub-Saharan Africa, with provisional data showing that between 1996 and 2010, the share of Africans living on less than $1.25 a day fell from 58 percent to 48.5 percent.

But World Bank economists cautioned that high inequality and a dependence on mining and mineral exports in many countries had actually dampened the poverty-reducing effect of income growth.

“While the broad picture emerging from the data is that Africa’s economies have been expanding robustly and that poverty is coming down, the aggregate hides a great deal of diversity in performance, even among Africa’s faster growers,” said Shanta Devarajan, the World Bank’s Chief Economist for Africa.

Noting that higher growth does not automatically mean less poverty, the report said resource-rich countries such as Gabon, Equatorial Guinea, and Nigeria performed worse than their less resource-blessed fellows.

The World Bank said better administering of mineral wealth, development of agriculture and a careful managing of rapid urbanization would help African governments seize the opportunity to lift more of their people out of poverty.

“Better governance will need to underpin efforts to make growth more poverty reducing,” the report said.

SOUTH AFRICA AMONG PROBLEM SPOTS

The bank added that continuing investment in infrastructure was critical to maintaining and strengthening growth.

Among the positive developments was the spreading energy exploration in East Africa that had led to the opening of several oil and gas wells.

In Southern Africa, Mozambique was expected to attract increased foreign investment in its huge coal deposits and offshore gas discoveries and Zambia would continue to see increased investments in its copper sector.

In West Africa, investment was likely to keep flowing into the minerals sectors of Ghana, Guinea, Liberia, Nigeria and Sierra Leone.

But the bank saw some problem spots, singling out labour unrest in South Africa, the region’s largest economy, and political unrest in Central African Republic, Mali and Togo.

Food price spikes could also be a cause for concern.

Also on the risk side, the World Bank said a fragile global recovery, whether characterized by a deterioration of market conditions in the euro zone or a weaker pickup in the United States, could still undermine the positive African outlook.

It added that with Chinese demand accounting for 50 percent of many industrial metals exported from Africa, a sharper-than-envisaged downturn there could lead to a slump in commodity prices, which would hurt resource-reliant African states.

(Editing by Ed Cropley)

In its latest Africa’s Pulse analysis of prospects for the
region, the bank saw increased investment, high commodity prices
and a pick-up in the global economy driving this expected growth
surge in the world’s poorest continent.

It said foreign direct investment (FDI) inflows to
Sub-Saharan Africa were projected to increase to record levels
each year over the next three years, reaching $54 billion by
2015.

This compared to $37.7 billion in 2012, a 5.5 percent
increase in a year when FDI flows for developing countries fell
on average by 6.6 percent, the bank added.

The Washington-based multilateral lender predicted
Sub-Saharan Africa’s growth would be 4.9, 5.1 and 5.2 percent
for 2013, 2014 and 2015 respectively.

In 2012, the region’s growth was estimated at 4.7 percent.

“If properly harnessed to unleash their full potential,
these trends hold the promise of more growth, much less poverty,
and accelerating shared prosperity for African countries in the
foreseeable future,” said Punam Chuhan-Pole, a lead economist in
the World Bank’s Africa department.

Compared with Africa’s expected growth spurt, global GDP was
projected to expand by 2.4 percent in 2013 and gradually
strengthen to 3 and 3.3 percent in 2014 and 2015.

The report said a decade of strong growth had reduced
poverty in Sub-Saharan Africa, with provisional data showing
that between 1996 and 2010, the share of Africans living on less
than $1.25 a day fell from 58 percent to 48.5 percent.

But World Bank economists cautioned that high inequality and
a dependence on mining and mineral exports in many countries had
actually dampened the poverty-reducing effect of income growth.

“While the broad picture emerging from the data is that
Africa’s economies have been expanding robustly and that poverty
is coming down, the aggregate hides a great deal of diversity in
performance, even among Africa’s faster growers,” said Shanta
Devarajan, the World Bank’s Chief Economist for Africa.

Noting that higher growth does not automatically mean less
poverty, the report said resource-rich countries such as Gabon,
Equatorial Guinea, and Nigeria performed worse than their less
resource-blessed fellows.

The World Bank said better administering of mineral wealth,
development of agriculture and a careful managing of rapid
urbanisation would help African governments seize the
opportunity to lift more of their people out of poverty.

“Better governance will need to underpin efforts to make
growth more poverty reducing,” the report said.

SOUTH AFRICA AMONG PROBLEM SPOTS

The bank added that continuing investment in infrastructure
was critical to maintaining and strengthening growth.

Among the positive developments was the spreading energy
exploration in East Africa that had led to the opening of
several oil and gas wells.

In Southern Africa, Mozambique was expected to attract
increased foreign investment in its huge coal deposits and
offshore gas discoveries and Zambia would continue to see
increased investments in its copper sector.

In West Africa, investment was likely to keep flowing into
the minerals sectors of Ghana, Guinea, Liberia, Nigeria and
Sierra Leone.

But the bank saw some problem spots, singling out labour
unrest in South Africa, the region’s largest economy, and
political unrest in Central African Republic, Mali and Togo.

Food price spikes could also be a cause for concern.

Also on the risk side, the World Bank said a fragile global
recovery, whether characterised by a deterioration of market
conditions in the euro zone or a weaker pickup in the United
States, could still undermine the positive African outlook.

It added that with Chinese demand accounting for 50 percent
of many industrial metals exported from Africa, a
sharper-than-envisaged downturn there could lead to a slump in
commodity prices, which would hurt resource-reliant African
states.

African policy-makers and chief executives of companies
operating in Africa are spreading this upbeat message, qualified
with some caveats, as interest in what was once dubbed the
“hopeless continent” blossoms along with growth rates.

Few doubt that the Africa Rising narrative, which has
grabbed the attention even of traditional sceptics, is based on
solid fundamentals: growth outpacing most of the world, a rising
young population of workers and consumers and global demand for
the continent’s commodities.

“I absolutely believe in a consistent upward trend,” said
Diana Layfield, Chief Executive Officer for Africa of Standard
Chartered, the London-listed bank which is investing $100
million in Africa to double its business in the next five years.

But this bullish pitch for Africa, enthusiastically echoed
by most participants at a Reuters Africa Investment Summit this
week, comes accompanied with a caution that the continent
remains a volatile, uneven and challenging place.

“If you were to compare it to the emergence of some markets
in Asia, you’ll see … more bumps in the road,” Layfield said.

While hubs like Nigeria and Kenya project the continent’s
potential, pockets of instability and flickering violence in old
and new hotspots such as Democratic Republic of Congo, Mali and,
more recently, Mozambique, serve as a constant reminder of a
turbulent track record.

Investors in the continent of 54 states – most of them south
of the Sahara – must also get to know the different markets,
cultures, and regulatory frameworks. That makes it distinct from
fast growing Asian giants India and China.

“With the best will in the world, nobody can be a good
investor across 44 countries,” said Marlon Chigwende, Managing
Director of the Carlyle Group’s $500 million Sub-Saharan Africa
Fund, which has just signed its second deal.

“But we think with a focused strategy you can make very good
risk-adjusted returns in Africa.”

Even in the short term, some investors are seeing returns:
stock markets in Nigeria and Kenya, west and east Africa’s
biggest economies, are both up more than 20 percent this year
after significant gains last year.

“A WHOLE DIFFERENT STORY”

Cheerleaders of the rising Africa message stress that it is
not just an economic growth story.

Sub-Saharan Africa’s expected GDP growth – forecast at 5.8
percent this year by the African Development Bank – is the envy
of much of the world as parts of the developed West struggle to
climb out of recession.

But Africa-watchers say the continent is also marching
forward across metrics ranging from democracy and governance to
economic management and the rule of law.

“Those basic fundamentals are either in place or getting
better,” said Clifford Sacks, CEO for Africa of Renaissance
Capital, the Russian investment bank which has been a pioneer in
opening up the business frontier in Africa.

Sacks and others said the old investors’ view of Africa as a
pool of oil and minerals to be tapped as a resource play – while
still significant, especially for big commodities buyers like
China – is not the full picture.

Mining represented only 14 percent of Africa’s growth while
53 percent came from services such as banking and
telecommunications, according to data for the 2002-2009 period
provided by Renaissance.

“When you peel back the onion a bit on growth … two thirds
- and that is what really attracts us – has been consumer
driven,” said Carlyle’s Chigwende. He said his group, the
world’s second largest private equity asset manager, was
focusing on fast-growing sectors like food, consumer goods,
telecoms, especially mobile telephony, and banking.

PRODUCE, NOT JUST CONSUME

There is broad consensus, however, that African governments
must seize the opportunity of rising growth and investment if
they want to make sure benefits reach populations clamouring for
jobs and better lives.

Investing resource income and other revenues in
infrastructure, education and health is essential, said Johan
Van Zyl, Toyota Motor Corp.’s CEO in Africa.

“We have a young population in Africa. It needs to be
absorbed into the economy, whether informal or formal, and job
creation is going to be critical,” he said.

“Africa will not just have to be a consumer continent, but
also a producing continent.”

Manufacturing is still scarce across Africa, concentrated in
the most developed economy, South Africa, where growth currently
lags that of the wider continent.

The continent’s share of manufacturing in its aggregate
output actually declined between 1980 and 2010, from more than
12 percent to 11 percent, according to a report from the U.N.
Economic Commission for Africa and the African Union.

In contrast, this share in East Asia topped 31 percent, they
lamented, urging African governments to promote “economic
transformation through commodity-based industrialization”.

To really bring job-creating investments, African
governments should above all avoid abrupt changes to laws that
move the goalposts for investors, Renaissance’s Sacks said.

“There is a pool of capital that sloshes around the globe,”
he said “If you want to be competitive, you have to put a
globalisation hat on.”

Held up as a star performer in the 1980s and 1990s, Zimbabwe
showed how badly things can go wrong during a decade of economic
collapse rooted in politics that were only reversed when rivals
agreed to share power after a violent election in 2008.

“Predatory politics” still impede Zimbabwe’s rise on the
tide lifting Africa, Finance Minister Tendai Biti told Reuters,
saying elections planned for this year would be crucial.

Even Nigeria, Africa’s top oil producer, combines a racing
economy with serious security challenges, including a persistent
and bloody northern insurgency by Islamist sect Boko Haram and
worries of renewed troubles in the oil-producing south.

But Layfield said the Nigerian market had its own
multi-faceted resilience. “For it to really go backwards, you
need really a lot of things to go wrong at the same time,” she
said.

“One interesting characteristic about African markets – they
absolutely reward long-term commitment,” she added.

(Additional reporting by Benon Oluka and Zandi Shabalala;
Editing by Matthew Tostevin)

The continent that was a byword for poverty, chaos and bloodshed only a few decades ago, providing a media feast of famines and wars, is slowly but steadily notching up gains on the democracy scorecard too.

Last month’s generally peaceful Kenyan presidential election – and the Supreme Court process that confirmed Uhuru Kenyatta’s narrow win – confounded pundits’ predictions that East Africa’s biggest economy would tumble back into the same inter-tribal violence which bloodied a 2007 vote.

The Kenyan ballot, following a line of hotly-contested but broadly smooth elections last year in Senegal, Sierra Leone and Ghana, has bolstered what many see as a spreading embrace of multi-party democracy in Africa.

Combined with better economic management by many governments and a fast-growing population of young workers and consumers, this improving political maturity will underpin expected GDP growth for Sub-Saharan Africa of five percent or more this year.

“If you peel back ‘Africa Rising’, it is not just growth rates,” said John Stremlau, Vice President for Peace Programs at the Atlanta-based Carter Center and a veteran observer of African elections, including the most recent Kenyan one.

In a December outlook for Sub-Saharan Africa, Fitch Ratings called the vote in Kenya, seen as a political and economic anchor in East Africa, an “important inflection point”.

Despite technical glitches and some localized violence, Kenya passed this test without repeating the 2007-2008 bloodletting that killed more than 1,200 people, helping to mend its image as one of Africa’s most stable democracies.

Standard Bank economist Simon Freemantle said the Kenya vote added to a list of recent African elections where incumbent leaders accepted defeat, such as Zambia’s Rupiah Banda in 2011 and Senegal’s Abdoulaye Wade in 2012, or where losing challengers heeded the verdict of the ballot box and the courts.

“The momentum, the general thrust is absolutely positive … these are all examples from very different countries … different geographically, historically, culturally, and all showing signs of that maturation,” Freemantle told Reuters.

MOMENTUM “POSITIVE BUT PATCHY”

He cautioned that the permeation of electoral democracy across a vast and varied continent was not uniform, as Africa has not completely shaken off some of its old demons.

“The African narrative in many ways is not a single-track story, it’s very patchy,” he said.

A rebel takeover in Central African Republic last month became the latest flashpoint of regional instability. This sucked in South Africa which suffered a blow to its ambitions to be the continental superpower by losing 13 soldiers on a military training mission killed in confused fighting there.

France’s robust military intervention in its former Sahel colony Mali in January repulsed a mix of al-Qaeda allied rebels, but at the same time raised fears of an Islamist jihadist backlash in North and West Africa, not least in Nigeria where the government is battling the northern Boko Haram insurgency.

Democratic Republic of Congo’s east remains a political and ethnic tinderbox and a surprise attack by pro-secessionist rebels in March on the second city and mining hub of Lubumbashi added to the instability woes of the central African giant.

A raid by opposition Renamo supporters in Mozambique on Thursday, killing four policemen, may also worry mining firms exploring huge coal and natural gas reserves.

Nevertheless, most Africa watchers say the continent has unquestionably moved on from the time when government change was more likely to come from the point of a gun than a ballot box.

In its 2012 “Africa attractiveness” survey, Ernst & Young recalled that between 1960, the milestone year for African independence, and 1990 there was only one instance of an African leader or ruling party being voted out of office.

The continent gained an unenviable reputation for bloody coups, kleptocratic “Big Men” dictators, and brutal civil wars fought over resources and often featuring child soldiers – an image of chaos and conflict that has endured over the years.

“The perception is that Africa is often more politically unstable, more corrupt and more challenging to do business than anywhere else in the world,” the Ernst & Young survey said.

But it argued the facts now “tell a different story,” noting that most African countries have transitioned, or are transitioning toward, some form of participatory democracy.

In its 2012 Democracy index, the Economist Intelligence Unit said elections had become a “normal occurrence” in Sub-Saharan Africa, while coups had declined sharply.

The EIU listed 22 Sub-Saharan African states classifying above Russia on its index, while 34 were listed above China.

But it noted that despite more infrequent coups, “conflict, failed government and human rights abuses remained widespread”.

“TIPPING POINT” FOR AFRICA

African Development Bank president Donald Kaberuka believes Africa, written off for decades as a hopeless continent always begging for aid, has now reached a milestone moment.

“It is not simply a tipping point in the fortunes of Africa, it is a tipping point in how the rest of the world looks at Africa as well,” he told Reuters at a summit of BRICS emerging powers last week held for the first time in Africa.

As China, India, Brazil and Russia increasingly court Africa, he says this is changing perceptions of the region from “a continent of problems” to a source of business opportunities in infrastructure, financial services, and agriculture.

Sudan-born telecoms entrepreneur Mo Ibrahim, who has created a $5 million annual prize to reward good governance in Africa, points to the record 86 percent Kenya election turnout as a sign Africans are embracing electoral democracy as a viable force. This contrasts with low turnouts in older western democracies.

Tipping the balance towards improving governance, Ibrahim said, was a critical mass of Africa’s young population who were better educated and better informed than their parents.

“They ask ‘Why are we like this? Why aren’t we like the Europeans and Americans, why not like China?’,” he added.

Standard Bank’s Freemantle said this increasingly vocal “voice and agency of the people” was being strengthened by growing urbanization and access to technology across Africa.

“These dynamics for me are all suggesting that political systems are having to be more nimble and relevant,” he said.

BEWARE EXCLUSION

But Africa’s burgeoning growth, swelling population and blossoming wealth – for some – has a potential weakness in the widening inequality gap in most African societies today.

If the continent’s fast-growing young urbanized populations feel excluded from the material benefits of an economically rising Africa, or if these spoils are appropriated by ruling elites, then this risks touching off the same kind of social explosion that caused the “Arab Spring” in North Africa.

“We have to pay attention to inclusion. We cannot leave people behind,” Ibrahim said.

He urged governments to turn the economic boom into stable, lasting prosperity by investing in human development, education and infrastructure.

Freemantle also warned that African mega-cities like Lagos could become dangerous “pressure cookers” if visible disparities in wealth were not tackled by national and local authorities.

Nevertheless, AfDB’s Kaberuka sees Africa in a “bullish mood” as the developed West struggles with economic problems.

Clearly, as France’s intervention in Mali shows, there are still limits to this new African spirit of self assertiveness, and capacity in security and defense is certainly one of them.

But Kaberuka says Africa can start by solving its own problems with its own resources. His AfDB is planning to launch an infrastructure bond in the coming months to raise up to $22 billion for investments in targeted infrastructure projects, to be bought by reserves held by member nations’ central banks.

“Africa is coming of age,” he said.

(Reporting by Pascal Fletcher; Editing by Peter Graff)

The continent that was a byword for poverty, chaos and bloodshed only a few decades ago, providing a media feast of famines and wars, is slowly but steadily notching up gains on the democracy scorecard too.

Last month’s generally peaceful Kenyan presidential election – and the Supreme Court process that confirmed Uhuru Kenyatta’s narrow win – confounded pundits’ predictions that East Africa’s biggest economy would tumble back into the same inter-tribal violence which bloodied a 2007 vote.

The Kenyan ballot, following a line of hotly-contested but broadly smooth elections last year in Senegal, Sierra Leone and Ghana, has bolstered what many see as a spreading embrace of multi-party democracy in Africa.

Combined with better economic management by many governments and a fast-growing population of young workers and consumers, this improving political maturity will underpin expected GDP growth for Sub-Saharan Africa of five percent or more this year.

“If you peel back ‘Africa Rising’, it is not just growth rates,” said John Stremlau, Vice President for Peace Programs at the Atlanta-based Carter Center and a veteran observer of African elections, including the most recent Kenyan one.

In a December outlook for Sub-Saharan Africa, Fitch Ratings called the vote in Kenya, seen as a political and economic anchor in East Africa, an “important inflection point”.

Despite technical glitches and some localised violence, Kenya passed this test without repeating the 2007-2008 bloodletting that killed more than 1,200 people, helping to mend its image as one of Africa’s most stable democracies.

Standard Bank economist Simon Freemantle said the Kenya vote added to a list of recent African elections where incumbent leaders accepted defeat, such as Zambia’s Rupiah Banda in 2011 and Senegal’s Abdoulaye Wade in 2012, or where losing challengers heeded the verdict of the ballot box and the courts.

“The momentum, the general thrust is absolutely positive … these are all examples from very different countries … different geographically, historically, culturally, and all showing signs of that maturation,” Freemantle told Reuters.

MOMENTUM “POSITIVE BUT PATCHY”

He cautioned that the permeation of electoral democracy across a vast and varied continent was not uniform, as Africa has not completely shaken off some of its old demons.

“The African narrative in many ways is not a single-track story, it’s very patchy,” he said.

A rebel takeover in Central African Republic last month became the latest flashpoint of regional instability. This sucked in South Africa which suffered a blow to its ambitions to be the continental superpower by losing 13 soldiers on a military training mission killed in confused fighting there.

France’s robust military intervention in its former Sahel colony Mali in January repulsed a mix of al-Qaeda allied rebels, but at the same time raised fears of an Islamist jihadist backlash in North and West Africa, not least in Nigeria where the government is battling the northern Boko Haram insurgency.

Democratic Republic of Congo’s east remains a political and ethnic tinderbox and a surprise attack by pro-secessionist rebels in March on the second city and mining hub of Lubumbashi added to the instability woes of the central African giant.

A raid by opposition Renamo supporters in Mozambique on Thursday, killing four policemen, may also worry mining firms exploring huge coal and natural gas reserves.

Nevertheless, most Africa watchers say the continent has unquestionably moved on from the time when government change was more likely to come from the point of a gun than a ballot box.

In its 2012 “Africa attractiveness” survey, Ernst & Young recalled that between 1960, the milestone year for African independence, and 1990 there was only one instance of an African leader or ruling party being voted out of office.

The continent gained an unenviable reputation for bloody coups, kleptocratic “Big Men” dictators, and brutal civil wars fought over resources and often featuring child soldiers – an image of chaos and conflict that has endured over the years.

“The perception is that Africa is often more politically unstable, more corrupt and more challenging to do business than anywhere else in the world,” the Ernst & Young survey said.

But it argued the facts now “tell a different story,” noting that most African countries have transitioned, or are transitioning toward, some form of participatory democracy.

In its 2012 Democracy index, the Economist Intelligence Unit said elections had become a “normal occurrence” in Sub-Saharan Africa, while coups had declined sharply.

The EIU listed 22 Sub-Saharan African states classifying above Russia on its index, while 34 were listed above China.

But it noted that despite more infrequent coups, “conflict, failed government and human rights abuses remained widespread”.

“TIPPING POINT” FOR AFRICA

African Development Bank president Donald Kaberuka believes Africa, written off for decades as a hopeless continent always begging for aid, has now reached a milestone moment.

“It is not simply a tipping point in the fortunes of Africa, it is a tipping point in how the rest of the world looks at Africa as well,” he told Reuters at a summit of BRICS emerging powers last week held for the first time in Africa.

As China, India, Brazil and Russia increasingly court Africa, he says this is changing perceptions of the region from “a continent of problems” to a source of business opportunities in infrastructure, financial services, and agriculture.

Sudan-born telecoms entrepreneur Mo Ibrahim, who has created a $5 million annual prize to reward good governance in Africa, points to the record 86 percent Kenya election turnout as a sign Africans are embracing electoral democracy as a viable force. This contrasts with low turnouts in older western democracies.

Tipping the balance towards improving governance, Ibrahim said, was a critical mass of Africa’s young population who were better educated and better informed than their parents.

“They ask ‘Why are we like this? Why aren’t we like the Europeans and Americans, why not like China?’,” he added.

Standard Bank’s Freemantle said this increasingly vocal “voice and agency of the people” was being strengthened by growing urbanisation and access to technology across Africa.

“These dynamics for me are all suggesting that political systems are having to be more nimble and relevant,” he said.

BEWARE EXCLUSION

But Africa’s burgeoning growth, swelling population and blossoming wealth – for some – has a potential weakness in the widening inequality gap in most African societies today.

If the continent’s fast-growing young urbanised populations feel excluded from the material benefits of an economically rising Africa, or if these spoils are appropriated by ruling elites, then this risks touching off the same kind of social explosion that caused the “Arab Spring” in North Africa.

“We have to pay attention to inclusion. We cannot leave people behind,” Ibrahim said.

He urged governments to turn the economic boom into stable, lasting prosperity by investing in human development, education and infrastructure.

Freemantle also warned that African mega-cities like Lagos could become dangerous “pressure cookers” if visible disparities in wealth were not tackled by national and local authorities.

Nevertheless, AfDB’s Kaberuka sees Africa in a “bullish mood” as the developed West struggles with economic problems.

Clearly, as France’s intervention in Mali shows, there are still limits to this new African spirit of self assertiveness, and capacity in security and defence is certainly one of them.

But Kaberuka says Africa can start by solving its own problems with its own resources. His AfDB is planning to launch an infrastructure bond in the coming months to raise up to $22 billion for investments in targeted infrastructure projects, to be bought by reserves held by member nations’ central banks.

“Africa is coming of age,” he said.

(Reporting by Pascal Fletcher; Editing by Peter Graff)

The Russian president’s comparison captures the dilemma of these muscular emerging global powers, which together present a formidable potential economic and political counterweight to the developed West, but individually could hardly be more different.

The question is whether the BRICS five can run as a herd or hunt as a pack on the global stage, transforming their diverse but collective strength into real institutions and coordinating structures to project their voice in the world.

At a two-day summit in Durban, South Africa, the leaders of countries that make up more than 40 percent of the world’s population and a fifth of global GDP seemed to have little concrete to show from their mostly closed-door deliberations.

After mooting plans for a BRICS development bank at a summit in New Delhi a year ago, the leaders in Durban were only able to announce the start of formal talks on the constitution of the bank, a lumbering pace even for a group as diverse as the BRICS.

“We have decided to enter formal negotiations to establish a BRICS-led new development Bank based on our own considerable infrastructure needs, which amount to around $4.5 trillion over the next five years,” the host, South African President Jacob Zuma, told the summit.

He added the bank aimed to cooperate in the future with other emerging markets and developing countries, but revealed little about the structure of a world institution pitched as a potential complement, if not rival, to the IMF and World Bank.

A separate statement from the five heads of state blandly hailed the development bank plan as “feasible and viable”.

Russian Finance Minister Anton Siluanov had said on Tuesday that BRICS ministers in Durban seeking to thrash out the technicalities of the bank had not been able to agree yet on details of its funding or its location.

“It cannot be done overnight. We just used one year since the New Delhi summit to complete a feasibility study and now we are at a very different stage where, as always, the devil is in the details,” Russia’s deputy foreign minister Sergey Ryabkov told Reuters on Wednesday.

Zuma also announced the group’s “resolve” to set up a $100 billion foreign exchange reserves pool, again indicating little real progress on creating another financial coordination tool.

BORN IN A RESEARCH PAPER

That the BRICS have come even this far could be seen as surprise. The group began as an idea in a 2001 research note by a Goldman Sachs banker, who coined the term BRIC to refer to fast-growing big countries Brazil, Russia, India and China, on a path to overtaking the world’s rich nations in economic power.

Those four are the only developing countries that number in the world’s top 10 by GDP, and each is a giant in its region, but they have little else directly in common. Yet they share a sense that institutions set up by the West are ignoring their interests, and in 2009 they held a summit in Russia, announcing their goal of joining forces to counterbalance the West.

They have held annual summits since, in 2010 adding South Africa, the largest economy on its continent, although it barely cracks the global top 30 and is a twentieth of China’s size.

“We have firmly established BRICS as a credible and constructive grouping in our quest to forge a new paradigm of global relations and cooperation,” Zuma said on Wednesday.

At the Durban summit, the South African hosts announced the signing of two multilateral agreements, one on “green economy co-financing”, the other on infrastructure co-financing for Africa, but no figures or details were immediately given.

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Graphic on BRICS economies: link.reuters.com/ruz86t

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BARK, BUT NO BITE?

Seasoned BRICS observers said they were not surprised by the lack of concrete institution-creating results from the summit.

“I think there was too much hype around it,” said Martyn Davies, chief executive of the Johannesburg-based Frontier Advisory consultancy that focuses on emerging markets.

“They are still battling to create the economic institutions to back their geopolitical rhetoric … the rhetoric is not supported by the substance,” he told Reuters.

Just as lions, elephants and rhinos are not natural allies, Davies saw the BRICS countries as “very disparate, with no political commonality”.

After only a few hours of plenary talks at a Durban conference centre, the BRICS heads of state retreated to a nature reserve lodge on Durban’s outskirts for a closed-door dialogue with a score of African presidents about “unlocking Africa’s potential” by supporting infrastructure construction.

Led by China, the BRICS are now Africa’s largest trading partners and its biggest new group of investors. BRICS-Africa trade is seen eclipsing $500 billion by 2015, with China accounting for 60 percent, according to Standard Bank.

African governments and leaders broadly welcome the multi-billion-dollar Chinese-led BRICS trade and investment influx.

“You have to put money into development. The West has not put money in. This is what China does,” Congo Republic’s Transport Minister Rodolphe Adada told Reuters in Durban.

He said Africa could only benefit from the eventual creation of the BRICS development bank: “What we already do individually (with BRICS members), we can multiply if we have this instrument,” Adada said.

SIGNALS TO THE WEST

Bala Ramasamy, economics professor at Shanghai’s China Europe International Business School, said that despite kindred statements about rebuilding the world’s financial architecture, the BRICS nations have struggled to find a common identity.

“The BRICS as a group does not mean much. They mean something individually. This is not an alliance of equal partners. China is the dominant player here,” Ramasamy said.

“If you think about BRICS as a balancing power to the U.S. and the EU, this is not one entity. So how do you expect them to counterbalance the United States?” he added.

The World Bank has always been led by an American and the IMF by a European since both bodies were founded in 1946. Last year, the BRICS failed to agree on a developing world candidate to be the new World Bank president and could not stop the appointment of another U.S. citizen, Korean-born Jim Yong Kim.

Frontier Advisory’s Davies said he believed the only emerging power which presents a real substantive challenge to the existing world political and financial status quo is China. But he added Beijing seemed unwilling to shoulder this burden alone and sought company in the BRICS group.

In Beijing, the influential Chinese tabloid the Global Times acknowledged the BRICS would face some problems when seeking to deepen their multilateral cooperation.

“But they are at least encouraging each other and increasingly distancing their interests from Western ones. This will further define fairness and justice worldwide.”

In the absence of concrete institutions to consolidate and leverage their clout on the global stage, Davies said the BRICS should consider widening their organization. “What about new members … Turkey, Indonesia, Mexico, Nigeria?” he said.

Ramasamy said the BRICS summits served as “a signal to the developed world that the emerging markets are getting their act together one way or the other”.

“Whether they do it or not is a separate question.”

(Additional reporting by Ben Blanchard in Beijing, Jon Herskovitz, Agnieszka Flak and Marina Lopes in Durban; Editing by Peter Graff)

The slogan evokes the 19th Century conference in Berlin
where the predominant European colonial states carved up the
African continent in a scramble historians see as epitomising
the brash exploitative capitalism of the time.

Decades after Africans threw off the colonial yoke, it is
the turn of the blossoming BRICS group of Brazil, Russia, China,
India and South Africa to find their motives coming under
scrutiny as they proclaim an altruistic-sounding “partnership
for development, integration and industrialization” with Africa.

Led by that giant of the emerging powers, China, the BRICS
are now Africa’s largest trading partners and its biggest new
group of investors. BRICS-Africa trade is seen eclipsing $500
billion by 2015, with China taking the lion’s share of 60
percent of this, according to Standard Bank.

BRICS leaders persist in presenting their group – which
represents more than 40 percent of the world’s population and
one fifth of global gross domestic product – in the warm and
fuzzy framework of benevolent South-South cooperation, an
essential counterweight to the ‘old’ West and a better partner
for the poor masses of the developing world.

In his first trip to Africa as head of state, China’s new
president Xi Jinping expounded this line in Tanzania on Monday,
saying his country wanted “a better life for African people” and
was offering a relationship of equals.

“We think there’s too much back-slapping,” said Patrick Bond
of the University of KwaZulu-Natal’s centre for Civil Society,
who helped to organise an alternative “BRICS-from-below” meeting
in Durban to shadow the BRICS summit on Tuesday and Wednesday.

Bond and other critics of the BRICS’ South-South pitch say
developing countries that receive investment and assistance from
the new emerging powers need to take a hard, close look at the
deals they are getting.

Beneath the fraternal veneer, Bond sees “incoherent imperial
competition” not unlike the 19th Century scramble, saying that
BRICS members are similarly coveting and exploiting African
resources without sufficiently boosting industrialisation and
job-creation, all much needed on the continent.

This view has gained some traction in Africa as citizens
from Guinea and Nigeria to Zambia and Mozambique increasingly
see Brazilian, Russian, Indian, Chinese and South African
companies scooping up multi-billion dollar oil and mining deals
and big-ticket infrastructure projects.

Many of these deals have come under scrutiny from local and
international rights groups. More than a few have faced
criticism that they focus heavily on raw material extraction,
lack transparency and do not offer enough employment and
developmental benefits to the receiving countries – charges
often levelled against corporations from the developed West.

“NEW FORM OF IMPERIALISM”

Anti-poverty activists say the profit motivation of large
BRICS corporations working in Africa is no different from that
of Western companies.

“Matters of greed are universal and their actors come from
both the North and the South,” said Wahu Kaara, a Kenyan social
justice campaigner and coordinator of the Kenya Debt Relief
Network who attended the “BRICS-from-below” meeting.

This wariness of the new players in Africa has even
permeated some government circles on the continent.

Warning Africa was opening itself up to “a new form of
imperialism”, Nigerian central bank governor Lamido Sanusi
accused China, now the world’s No. 2 economy, of worsening
Africa’s deindustrialisation and underdevelopment.

“China takes our primary goods and sells us manufactured
ones. This was also the essence of colonialism,” Sanusi wrote in
a March 11 opinion column in the Financial Times.

“Africa must recognise that China – like the U.S., Russia,
Britain, Brazil and the rest – is in Africa not for African
interests but its own,” Sanusi added.

Chinese and other BRICS leaders indignantly reject the
criticism their group represents a kind of “sub-imperialism” in
their growing economic and political engagement with Africa.

Zhong Jianhua, China’s special envoy to Africa, told Reuters
that China and Africa’s common history of resisting colonial
pressure put their relationship on a different level.

“China was bullied by others in the past, and so was Africa.
This shared experience means they have a lot in common. This is
China’s advantage and the reason why many Western countries are
at a disadvantage,” he said in an interview with Reuters.

Zhong added that China should encourage its companies to
train and employ more African workers, responding to complaints
that Chinese investors often brought in their own workforces.

Catherine Grant-Makokera of the South African Institute of
International Affairs said BRICS governments did noticeably
operate differently from the West in the way they offered
financing and aid to nations in Africa.

“You’ve seen a greater willingness from the newer players to
invest in things like hard infrastructure, either through
financing mechanisms, or simply grants or gifts,” said
Grant-Makokera, SAIIA’s programme head for economic diplomacy.

But she acknowledged the BRICS development aid approach,
while offering faster turnaround times for projects, was often
less restrained by labour and environmental considerations.

This has opened BRICS companies up to charges that in their
haste to develop resource projects in Africa they flaunt local
communities’ rights and ride roughshod over the environment.

Brazilian mining giant Vale, named in 2012 by the Swiss
non-profit group Public Eye as the corporation with the most
“contempt for the environment and human rights” in the world,
defends its record in Mozambique, where it is investing billions
of dollars to develop coal deposits and infrastructure.

It has faced violent demonstrations from Mozambicans
protesting forced relocations and demanding greater benefits.

Vale’s head of Africa operations, Ricardo Saad, said the
fact the company had experienced “problems” did not mean it
could be accused of “neo-colonial” behaviour in Africa.

He said colonial powers just came and took the continent’s
resources, without asking its people, whereas contracts today
were closely negotiated with governments and communities.

“From the moment that I seek a licence to operate, where you
talk to a community, where anything you do has authorisation and
previous planning with the government, I can’t say that’s
neo-colonialism,” Saad told Reuters.

NEW VOICES

Development analysts say the BRICS, with their radically
different economies, governments and competing priorities, still
need to demonstrate that they can change global power structures
to the benefit of the world’s poor and underprivileged.

“The fact that they are pressing for a new balance of power
in the world has to be stressed as a positive thing…they have
new voices,” said Nathalie Beghin of the Brazilian pro-democracy
and rights organisation INESC.

But she added in a jab at what activists say is the BRICS’
leadership-focused, top-down mode of operating so far: “They say
they are the voices of the poor. But where are the poor?”

SAIIA’s Grant-Makokera says the BRICS offer developing
states other options for aid and investment as an alternative to
the old Western partners.

“At least you’ve got a diversity now, I don’t think that can
be underestimated,” she said.

Landlocked, isolated and poverty stricken, despite its reserves of gold, timber, uranium and gemstone quality diamonds, Central African Republic has been racked by debilitating rebellions for more than a decade.

In the latest revolt, fighters from a loose rebel alliance demanding an end to years of exclusion from government seized control of the riverside capital Bangui on Sunday, forcing President Francois Bozize to flee.

Bozize’s toppling by the rebel Seleka coalition is another setback for efforts in Africa to build solid foundations of constitutional rule to accompany the continent’s buoyant economic growth in an otherwise troubled global economy.

It is particularly embarrassing for South Africa, which is seeking to project itself as an influential regional power on the continent this week as it hosts a summit of the BRICS emerging states and welcomes new Chinese President Xi Jinping on his first visit to Africa as head of state.

South African troops, in Central African Republic under a defense cooperation agreement, suffered losses fighting alongside government soldiers in a failed attempt to stop the rebels entering Bangui and to keep Bozize in power.

While lacking the strategic attention gained by other African hotspots such as Mali, Somalia or eastern Congo, Central African Republic has nevertheless been a festering sore of instability at the heart of an economically rising continent.

Some of the root causes of this lie in a colonial history of isolation and neglect. This was compounded after independence in 1960 by coups and bloody mutinies, French military meddling and rule by one of the world’s most bizarre and extravagant dictators, Jean-Bedel Bokassa, self-styled Emperor Bokassa I.

Bozize, a veteran military strongman who served as a general in Bokassa’s 1977-79 “Empire” and later seized power in a 2003 coup before winning a 2005 election, had opened a so-called Inclusive Political Dialogue with his rebel foes in 2008.

But his failure to deliver genuine power sharing, followed by his re-election in disputed 2011 polls which the opposition boycotted over alleged fraud, led directly to the offensive by the Seleka coalition of five armed rebel groups.

Fighters from Seleka, which means “alliance” in the local Sango language, had already closed in on Bangui in December, forcing Bozize to agree to a mid-January power-sharing deal that saw the formation of a national unity government.

But last week the rebels ended the ceasefire accord, accusing Bozize of failing to keep his promise to send the South African troops home and incorporate 2,000 rebels into the army.

“There is a frustration that has grown and grown with Bozize’s way of governing, which has been very uninclusive,” said Louisa Lombard, a post-doctoral fellow at the University of California, Berkeley who has studied the Central African insurgencies.

“PHANTOM STATE”

Experts point to the absence of economic development and government control in Central African Republic’s bush interior as a major driver of discontent and revolt in a nation slightly larger than France but with a population of only 4.5 million.

This is seen as an inheritance of colonial times, when the territory, named Oubangui-Chari after two prominent local rivers, was an remote and neglected outpost between better developed French possessions in Chad and Congo Brazzaville.

In recent years, CAR’s extensive borders have been porous and unprotected, with armed intruders from Chad, Sudan and Democratic Republic of Congo crossing at will to raid villages and poach wildlife, joining local bandits known as “zaraguinas”.

A 2009 U.S. diplomatic cable from Bangui bluntly calls Central African Republic “a country defined by its borders on the map and not by effective state control of its territory”.

The Brussels-based International Crisis Group termed it “a phantom state” in 2007.

After the end of France’s colonial African empire in 1960, Central African Republic had the dubious distinction of being the state that experienced the most frequent French military interference in the continent’s post-independence history.

French soldiers, known locally as “barracudas” after France’s 1979 “Operation Barracuda” regime change that removed Bokassa from power, have over the years installed and ejected CAR leaders and helped quash rebellions and mutinies.

As recently as 2006 and 2007, French Mirage jets helped government soldiers repel insurgents in the restless northeast.

But while France launched a major military intervention in the Sahel state of Mali in January to drive back al Qaeda-linked Islamist fighters it considers a serious regional threat, President Francois Hollande has made clear he does not view the revolt against Bozize in the same strategic light.

Despite appeals by Bozize to “our cousins” Paris and Washington for help, France has insisted its several hundred troops in its landlocked ex-colony are there solely to protect French nationals and interests and not the local government.

France said on Sunday it would send more troops to Bangui to protect its more than 1,000 citizens there.

GENERAL UNDER BOKASSA

For long-time observers of Central African Republic, the rekindling of the rebellion was a foregone conclusion after the failure of the 2008 process to form an inclusive government.

“There was a minor shuffle and opposition figures were given insignificant ministries, but the result cannot be viewed as a true power sharing accord,” then U.S. ambassador, Frederick B. Cook, wrote in a 2009 diplomatic cable revealed by Wikileaks.

Cook, who has since retired from the U.S. foreign service, was blunt in his assessments of Bozize, calling him “leader of a failed state”, who presided over a “kleptocratic government”, according to other 2009 cables.

The sense of exclusion among opponents of Bozize worsened after the 2011 presidential and legislative elections handed a sweeping re-election victory to the president and his Kwa Na Kwa party, under the opposition’s boycott.

An internal European Commission report said opposition candidates were “marginalized”, while internationally-backed security reforms and plans to disarm and demobilize the rebels became stalled, sowing the seeds for the revival of insurgency.

Bozize remains a contentious figure, who rose to prominence during the rule of Bokassa, a much decorated veteran of France’s colonial wars who seized power in a 1966 coup.

According to a 1997 book, “Dark Age – The Political Odyssey of Emperor Bokassa” by historian Brian Titley, Bozize was promoted from second-lieutenant to general by Bokassa after he hit a Frenchman who was showing disrespect to the president.

Bokassa had himself crowned Central African Emperor in 1977 in a $22 million ceremony bankrolled by France – an extravaganza of pomp in a pauper state that was pilloried around the world.

Titley said Bozize and another of Bokassa’s generals, Josephat Mayomokola, along with the elite imperial guard, were ordered by the Emperor to suppress student-led protests in 1979. Dozens of people were killed in Bangui’s poor suburbs.

The arrest and deaths in jail of schoolchildren in these protests destroyed Bokassa’s relationship with main backer France and led to his ouster by French paratroops in 1979.

More than three decades later, the Seleka rebels who have toppled Bozize say they want to organize national talks and a transition to democratic elections.

But there are questions about whether this can end the cycle of instability in Central African Republic. The rebels who have replaced Bozize are themselves diverse and divided, split between bush guerrilla leaders and exiled politicians.

“What unites everyone is a hatred of Bozize, but whether that proves strong enough to hold them together is an open question,” said Lombard.

(This story corrects dates of Central African Empire to 1977-79 from 1997-99 in ninth paragraph)

(Reporting by Pascal Fletcher)