Business Insight Zone

Two interesting items on African business this morning:

• “Seeking Riches in Africa” from the Wall Street Journal’s MarketBeat blog — Key items to take away: (1) Africa’s economy is growing faster the worldwide economy as a whole, thanks largely to surging revenues for commodities (primarily oil, but also copper, gold, diamonds, etc.); but (2) risks abound — and in some cases the perception of risks is even worse than the reality.
• “In 10-nation poll, Africans see a better future” from the International Herald Tribune — The nature of the article is well summarized by its opening sentence: “Despite a thicket of troubles, from deadly illnesses like AIDS and malaria to corrupt politicians and deep-seated poverty, a plurality of Africans say they are better off today than they were five years ago and are optimistic about their future and that of the next generation, according to a poll conducted in 10 countries in sub-Saharan Africa by The New York Times and the Pew Global Attitudes Project.” (My old-school journalism teacher would be so proud!) The whole article is worth reading, since it gives a much better view of Africans’ opinions that we usually get from US media.

My own best guess is that, for years or decades to come, some areas of Africa (e.g. the Central African Republic, Zimbabwe, and eastern Congo) will continue to suffer the worst effects of misrule and inter-ethnic strife. When these problems are compounded by drought or other natural disasters, the effects are going to be dire — and they’re certainly not going to encourage business investment from outsiders. But for other areas, the future could be bright: more and more businesses from the US, Europe, and Asia are investing in Africa’s more stable areas, including countries like South Africa and Namibia.

The WSJ item cited above rightly highlights Africa’s “bountiful natural and human resources” — resources that have been grossly under-used and mis-used in the past. Africa is home to roughly 900 million people, yet it received only $39 billion in foreign direct investment last year. According to UN figures, in 2005 Germany alone — with just 82 million residents — drew about as much foreign direct investment as all of Africa. Obviously, even with all its mineral resources and its embrace of democracy, Namibia has a long way to go to match Germany economically. But that also means that there is plenty of headroom for economic growth in Africa’s stable regions, something that savvy enterprises from both the West and the East are figuring out.