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.
The Global Innovation Outlook 3.0 report explores sustainable economic development in Africa. GIO is sponsored by IBM. It attempts to synthesise a
consensus from more than 150 business, government, academic and NGO leaders across nine deep dive sessions.
Read the summary here or
download the report here (3.8mb pdf).
A Templeton conversation. The concensus seems to be No. Either was the participants are well informed and offer a broad insight to the challenges of Africa. Read it here.
China’s largest bank, the state-run Industrial and Commercial Bank of China, announced plans to acquire a 20% stake in Africa’s biggest bank, Standard Bank, for US$5.5 billion. If approved by South African regulators and ICBC shareholders, the deal would lead to the creation of a US$1 billion private equity fund that will be established by the two companies to focus on emerging markets. The partnership would leverage Standard Bank’s experience in and access to markets throughout Africa. Standard Bank has a presence in 17 African nations and investments in many African firms. Chinese officials have already signalled an interest in investment opportunities in South Africa, Nigeria, Cameroon, Zambia, Congo-Brazzaville, and Angola. This deal is another sign of both China’s interest in Africa and China’s strategy of making significant strategic equity investments around the world, highlighted by the recent stake in Blackstone.
This Jamestown Institute article African Perspectives on China offers a summary of the growing relationship of Africa with the rest of the world, especially China. Two main conclusions are apparent: China deals with Africa in a straightforward way (eg access to oil for a railway or factory) which is difficult for western businesses, particularly American ones, which are governed by more stringent laws on collusion and conflict of interest. China is a very attractive partner and African nations should diversify their relationships with other Asian nations to reduce reliance on China. For western businesses, the challenge is to offer Africa more or what they need, less charity, more investment.
A new African investment guide, Invest in Kenya: Focus Kisumu, was launched by the Millennium Cities Initiative and the Columbia Program on International Investment in Nairobi on September 26. MCI’s first investor’s guide focuses on Kisumu, the first city named a Millennium City. Kisumu, located on Lake Victoria, is Kenya’s third largest city and an important economic center. Its location, climate and safety, combined with Kenya’s increasing access to foreign markets, make Kisumu attractive to investment in a number of areas. One sector of great potential discussed in the Guide is agriculture, with opportunities in the areas of sugar cane, cotton, groundnuts, rice, and horticultural crops. Other areas with potential include aquaculture, agro-processing and dairy. The Guide delves into these opportunities as well as relevant matters such as tax and regulatory conditions in Kenya.