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We have takeoff

November 17, 2010
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As Asia rises so will Africa. Thanks to the continent’s vast natural resource wealth. But is Africa, touted as the “last frontier”, ready? Several think-tanks, economists and global institutions are Afro-optimists. Private equity firms are cautiously bullish. They are wary of poor infrastructure and a limited pool of local talent. Yet, the facts tell a compelling story. According to Vox, a think-tank:

“economic performance in Africa improved strongly in the period from 2001 to 2008 after two decades of weak performance. Post-economic crisis, African countries have also benefited from the quick rebound in commodity prices, and their growth has been shored up by investments and trade with the emerging economies. A significant reduction in the debt burden for many countries, together with greater inflows of private capital and better macroeconomic management, means that the prospects for many African countries are better than they have been since the 1970s.”

That said, a negative perception persists.  Besides there are 52 countries in Africa. And thus, as many views. Add to that a $31 billion infrastructure deficit. Nevertheless, China and India have no qualms doing business in the region. Reuters reports that infrastructure* is “the next big move for China firms”. China’s president-in-waiting is on a tour of South Africa “for minerals and investment”.

Western economies and multilateral organisations don’t want to be left out. China’s no-string attached trade-focused foreign policy footprint is all over the continent. Winning the hearts and minds of African leaders (a good number with a knack for undemocratically holding onto power forever).

Though the World Bank’s performance on the continent got feeble rates in a recent test, it wants to play a role.  With a promo video and “political risk” insurance — in case of war, civil unrest or expropriation.  Fingers crossed.

*Little wonder. It’s part of the Seoul Consensus (see The G20 aftermath: The Delhi Consensus)

In Seoul, even as other emerging economies fretted about capital inflows, India’s prime minister, Manmohan Singh, pointed out that many developing countries would benefit from additional foreign investment in infrastructure. In his vision of global rebalancing, surplus savings should be invested in the roads, ports and power plants of developing countries, rather than America’s Treasuries. Indeed, the G20 will try to drum up more money for infrastructure as part of what it called the Seoul Consensus.

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