As contended in our Financial Crisis 2008 notes, it is likely that Africa will not suffer the same fate as Western economies in this implosion of the financial markets. In this report the BBC asks Can Africa gain in the credit crisis?
I see a number of issues in Africa’s favour:
- It is coming from a low level of economic activity so there is plenty of room to grow industry and consumption.
- It has tremendous resources – mineral, land and people – which can be managed better,
- It is increasingly stable and benefitting from educated, experienced returning Africans.
- It has developed productive relationships with China which provides appropriate technology for its level of development and requires the mineral commodities that Africa offers. The cultures know how to deal with one another and there is little stigma of colonisation or exploitation.
- There is tremendous commercial interest from investors.
There remain serous risks as in any emerging market. And some countries’ political risk is grossly unattractive. But overall, Africa is looking like a good bet. But go there with a friend, do your due diligence and don’t overpay.