Africa Finds a New Prominence

The stirrings of economic development that have lifted economies in Asia and Latin America in recent decades are coming at last to Africa.

The victory of insurgent Laurent Kabila in Zaire, which he is renaming the Democratic Republic of Congo, is only one event in a trend of reform.

Shifts in governments or economic policies have occurred in more than two dozen countries in sub-Saharan Africa. Economies are growing again in Uganda, Zimbabwe, Mozambique, Zambia, the French-speaking countries of West Africa and more.

South Africa, which looms over the continent with 40% of sub-Saharan Africa’s total output, is reaching out to neighboring countries with investments and know-how, even as it tries to build its post-apartheid economy at home.

To be sure, despotic governments remain in Nigeria and Sudan, and famine and disease are still chronic problems. Even Kabila’s government is likely to be plagued by uncertainty for some time to come.

But despair is yesterday’s story for Africa. Today’s is change and a rising sense that Africa is the next big magnet for global investment.

“I have a feeling in my bones that the next growth area is going to be here in southern Africa,” said Malaysian Prime Minister Mahathir Mohamad this month in the tiny country of Malawi. Indeed, companies from Malaysia, still a developing country itself, are investing in Africa.

And Washington is alive these days with talk of helping U.S. business invest and operate in Africa. The Africa Growth and Opportunity bill, sponsored by key Republicans and Democrats, is moving easily through the House. The bill would authorize roughly $500 million for the government’s Overseas Private Investment Corp. and Export-Import Bank to back U.S. company efforts in Africa.

And it would grant Africa special textile quotas so it could export more to U.S. markets. African economies are so small and poor that the exports of 45 countries account for less than 1% of U.S. imports.

Beyond legislation, Africa has become the subject of serious interest in the capital for the first time in more than 30 years. Vice President Al Gore has welcomed Thoba Mbeki, South Africa’s deputy president and heir apparent to Nelson Mandela, as a close friend; First Lady Hillary Rodham Clinton has led seminars on Africa since her recent two-week trip through the continent; Donald McHenry, former U.S. ambassador to the United Nations, is organizing meetings around the country that will lead to a summit on Africa in 1999; and a major item for discussion at next month’s meeting of the Group of Seven finance ministers in Denver will be Africa.

But talk is cheap. What does all this mean for Africa, for America, the world at large?

“I trust it means a support structure for investment and progress in Africa,” says Constance Freeman, director of African studies at the Center for Strategic and International Studies in Washington.

Commercial progress would be a welcome alternative to the disorder that has characterized many African countries for decades as home-grown despotism succeeded the colonial variety. Civil wars have killed tens of thousands, including U.S. Marines in Somalia. Governments have looted and weakened their own economies, and frightening diseases, including AIDS, have arisen in Africa.

Yet despite all that, the continent has generated the world’s fastest population growth rates, as medical care has kept children and adults alive. That in turn has produced pressures on food supplies and a recognition of the need for governmental reform.

As new leaders have taken over, the need for capital to build and rebuild has been paramount, and so they have issued calls for foreign investment--offering the kinds of terms high-risk propositions must offer.

“Foreign investors in Africa earn the highest returns in the world, 25% to 30%,” says economist Kader Allaoua of International Finance Corp., the private-sector arm of the World Bank.

Countries in flux, like Kabila’s new Zaire, are attracting a rush of opportunists. One of the first U.S. companies to go there is America Mineral Fields, a firm with operations in Dallas and headquarters in Hope, Ark., that is listed on the Toronto Stock Exchange and led by a native of Mauritius-born who explored for diamonds in the old Belgian Congo.

America Mineral executives, accompanied by financiers and Rep. Cynthia A. McKinney (D-Ga.), rushed to Zaire, talked to Kabila before he took power and came away with a concession to mine cobalt and copper.

Mining plays are traditional to Africa, “but long-term, the great potential is in food,” says Freeman. Many parts of Africa, particularly Uganda, Zaire and Zambia, are extremely fertile. But the land’s natural productivity has been held back by mismanagement and lack of roads to get crops to market.

That is changing. “Farmers are getting better prices because the state organizations that took the farmer’s share are being dismantled,” reports economist Allaoua. Roads are being built by infrastructure funds from the World Bank and private capital. And cooperation is replacing war and division. A standout development is the Maputo Corridor, a complex of highways and port facilities that moves goods from Johannesburg, South Africa, to Maputo, Mozambique, on the Indian Ocean. Developments are being financed by South African and Portuguese investors.

Chinese, Japanese and Malaysian companies are investing in Africa; Indian merchants, expelled in the 1960s, are coming back. When U.S. companies do venture back into Africa, they’ll find competition waiting.

Institutional and individual investors are slowly increasing their stake in African stocks through mutual funds, such as Calvert New Africa and Morgan Stanley Africa Investment. Short-term performance has been poor because of ups and downs in the South African economy.

Long-term, says Justin Beckett of New Africa Advisors, a fund management company in Durham, N.C., such companies as South African Breweries Ltd., which is spreading the small luxury of bottled beer through emerging markets, and Umchumi Supermarkets, in Kenya, should benefit from economic development.

Fortunes will be made and lost in high-risk Africa, of course. But in a larger sense, Africa’s budding renewal is historic. For a long time, the region that anthropologists say is the cradle of human life was looking like its graveyard.

Now the 550 million people of sub-Saharan Africa are getting a new chance to lift their living standards. That has to be good news for the world.

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From Angola to Aimbabwe: Ready to Blossom

Sub-Saharan Africa stands on the verge of an economic upsurge like those that have swept through Asia and Latin America. The 45 countries in the region:

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Country (capital) Population Gross domestic product Angola (Luanda) 10.6 million $7.7 billion Benin (Porto-Novo) 5.9 million 2 billion Botswana (Gaborone) 1.4 million 4 billion Burkina Faso (Ouagadougou) 9.9 million 3 billion Burundi (Bujumbura) 6 million 1 billion Cameroon (Yaounde) 12.5 million 10 billion Central Africa Rep. (Bangui) 2.4 million 1.3 billion Chad (N’Djamena) 6.2 million 1.2 billion Comoros (Moroni) 335,000 250 million Congo (Brazzaville) 2.4 million 2.3 billion Djibouti (Djibouti) 220,000 448 million Eritrea (Asmara) 3.4 million 340 million Ethiopia (Addis Ababa) 57 million 7 billion Gabon (Libreville) 1 million 4.9 billion Gambia (Banjul) 1 million 390 million Ghana (Accra) 16.4 million 7.3 billion Guinea (Conakry) 6.3 million 3.3 billion Guinea Bissau (Bissau) 1 million 250 million Ivory Coast (Yamoussoukro) 13.7 million 8.5 billion Kenya (Nairobi) 29.3 million 6.8 billion Lesotho (Maseru) 1.7 million 1.4 billion Liberia (Monrovia) 2.7 million 1 billion Madagascar (Antananarivo) 13.9 million 3 billion Malawi (Lilongwe) 10.5 million 1.6 billion Mali (Bamako) 7.7 million 2.4 billion Mauritania (Nouakchott) 2.2 million 1.1 billion Mauritius (Port Louis) 1.1 million 3.5 billion Mozambique (Maputo) 17.4 million 1.3 billion Namibia (Windhoek) 1.5 million 2.7 billion Niger (Niamey) 8.6 million 2.3 billion Nigeria (Abuja) 105 million 32 billion Rwanda (Kigali) 7.6 million 1.6 billion Senegal (Dakar) 8 million 5.9 billion Seychelles (Victoria) 62,000 453 million Sierra Leone (Freetown) 4.5 million 700 million Somalia (Mogadishu) 7 million 950 million South Africa (Pretoria) 41.2 million 125.5 billion Sudan (Khartoum) 25 million 10 billion Swaziland (Mbabane) 500,000 1 billion Tanzania (Dar es Salaam) 23 million 2.5 billion Togo (Lome) 3.9 million 1.3 billion Uganda (Kampala) 18 million 3.7 billion Zaire (Kinshasa) 37 million 8 billion Zambia (Lusaka) 8.9 million 3.4 billion Zimbabwe (Harare) 11.2 million 5.4 billion

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Note: Figures for 1994.

Source: World Bank