‘I cannot forecast to you the action of Russia,’ Winston Churchill commented in 1939. ‘It is a riddle, wrapped in a mystery, inside an enigma; but perhaps there is a key. That key is Russian national interest.’
Certainly Russia seems to have discovered where its self-interest lies, and now perhaps the same can be said of Africa. This was the message from a recent conference on the Dark Continent, hosted by the London Stock Exchange.
The most striking image displayed at the conference was one of the world at night. While lights glowed throughout Europe, North America and in parts of Asia there was hardly a glimmer in Africa. And this very effectively made the point that where basic infrastructure is concerned, Africa has a lot of ground to make up.
And yet of course this should not be the case. Africa may be poor in terms of gross national product, but it is rich in terms of resources. It has, I learned, greater reserves of nine of the top ten mineral resources than any other continent. It has land and it has a climate in which crops grow. It has people, eager for work and for advancement. In other words, it has all the ingredients for a successful economy – ingredients that so many other nations would like to have.
The question is whether this potential can be unlocked. Inevitably the conference was full of optimists. ‘The stars are converging,’ said one. ‘Now is the time for Africa.’ And certainly there are reasons for optimism.
Although the problems of Zimbabwe, Kenya and Darfur grab the headlines, politics have changed. Twenty five years ago there were only three African democracies – Mauritius, Senegal and Botswana. Today of 54 African nations 40 have a democratic system.
Improvements all around
Corruption is not the problem that it once was, when any business project would take five years and multiple backhanders to come to fruition. Investment is coming in from outside. China has invested $60bn into Africa and 750,000 Chinese work there.
The Middle Eastern countries have also been building contacts and investing hard cash. All African leaders want their share of this inward investment and understand that to get it they must do things the right way.
The money must be invested quickly and with minimal red tape. Foreign investors must know that they can get their money out. They will not get involved with a corrupt system if they can instead become involved with one that is not corrupt. They are not interested in a country where the only road is the one that leads from the presidential palace to the airport, in case of a coup.
So the money is coming in. It is looking for mining ventures, and it is looking for infrastructure projects. The telecoms industry is growing fast, and as with China, it is helping connect African citizens to the outside world.
Electric power, clean water, roads and ports are just some of the things that Africa needs. Banking too, and a representative of Barclays Bank described how mobile bank branches with satellite connections are being taken to outlying regions. And yet problems remain, and banking is one of these.
Many African countries have low or non-existent credit ratings. So international bankers impose stiff terms on lending and are reluctant to enter long-term deals. There is a lack of coordinated national planning, and a shortage of risk capital for early-stage ventures.
Local capital markets, although they are emerging, are very immature, while standards of accounting and project management are not always up to Western standards. There is a skill shortage that needs to be addressed through education.
But overall the mood of the conference was optimistic. One speaker referred to the ‘silent revolution’, meaning the fall in African inflation, the reduction of national debt and the accelerated growth rate. But what surely matters most for Africa, and is the single biggest reason for optimism, is the boom in commodities.
This is the magnet for so much foreign investment and the foundation of the continent’s self-interest. And it is not only the Chinese and the Arabs who have spotted the opportunity of Africa. UK businessmen have been drawn to the flame as well.
This article is taken from Tom Bulford’s free daily email, ‘Penny Sleuth’.