Africa's golden moment has come

As seventeen of Africa's 53 nations celebrate 50 years of independence in 2010, Africa's golden moment has come and investors around the globe must look to the continent often painted only as risk-prone if they are to capitalize on business opportunities.

This is according to World Bank Vice President for the Africa Region Obiageli Ezekwesili, who spoke to investors, business executives, members of the African Diaspora and students attending the seventh edition of the Columbia University African Economic Forum in New York.

With US$60 billion in investments, the revolution now visible to all in Africa's information and communications technology (ICT) sector for example is only a signpost of what is possible in other sectors still virgin in Africa, the vice president said.

ICTs, only one of many opportunities

Predicting that Africa's development will follow a totally different paradigm from that of other regions on account of the technology factor, Ezekwesili said the ICT sector is only one example of Africa s many opportunities of cashing in on transformative growth.

Thanks to mobile telephony, even where land lines were once non-existent or a luxury for the rich few, cell phones are now aplenty. Cell phones have, in fact, become one of the important assets for poor farmers in Kenya and fishermen in Sierra Leone, helping them to gain access to market information, bargain hard for their products, boost their incomes and take advantage of opportunities that would otherwise have past them by.

The emergence of a knowledge economy driven by innovation, ideas, education and technology once thought remote for Africa, now appears to be unfolding before the ink has dried on gloomy forecasts by Afro-pessimists.

All of a sudden, stereotypes even those once true about Africa seem increasingly removed from fact. Publishers are bombarded increasingly with books that speak of Africa as a rising development star; of Africa becoming the new Asia ; of Africa as the crucible of future global markets and wealth. National Geographic Magazine could not have been more accurate when it headlined in September 2005: Africa Whatever You Thought, Think Again .

If the global financial crisis proved one thing, it is that the riskiest markets and business ventures are not necessarily only in Africa, Ezekwesili told investors. The continent also offers splendid profit-making opportunities, she added, suggesting that investors who could but failed to get in on the ICT sector before the current boom must now be gnashing their teeth.

The ICT sector in Africa has proven that effective basic service delivery to the poor can be the basis for profit. Africa, she stressed, offers some of the highest rates of return on investments.

As Africa rebounds from the global economic crisis with growth forecasted at between 4.4 and 5.2 percent in 2010, opportunities in larger economies seem to be slowing down. It is a good thing. Now we can get you home, Ezekwesili told members of the African Diaspora in attendance.

She encouraged the Diaspora to think creatively about how to use some of the US$20 billion they wire home every year in remittances to help create jobs on a continent where growth has been without jobs.

Investing in Jobs

Unemployment rose 10 percent in Africa last year. An estimated seven to 10 million youth are added each year to an already long line of 200 million jobless African youngsters. A time bomb for a continent where social upheaval remains a real danger if millions of unemployed youth find it more rewarding to turn to crime or armed rebellion to earn their livelihoods.

Everything must be done to avoid what Ezekwesili described as the creative dissatisfaction of citizens gun in hand asking their governments what have you done for us of late.

Investments in five key areas could help, she explained. Africa must do more to expand income-generating opportunities in agriculture; to improve education, skills training and the empowerment of women and girls; to improve infrastructure; to expand access to credit; and to boost intra-African trade and regional integration.

Already under-funded, agriculture which is the source of livelihoods for more than 60 percent of Africans, notably girls and women, needs significant injections of capital to modernize, expand productivity, create jobs, and stem the threat it faces from weather vulnerability, which in some crops slashes yield by 50 percent.

Although Africa already competes favorably with China and India at factory floor level, it continues to miss out on the two percent increase in GDP growth and the 40 percent increase in productivity that would have accrued had it adequate infrastructure. Building skills and providing the kind of education that frees the creative genius of Africans would accelerate the shift of the continent to a knowledge economy.

Interest rates averaging eight percent across the continent with some countries charging an exorbitant 25 percent make investments an awfully expensive enterprise, especially for indigenous African entrepreneurs, reliant on local banks for funding. They indirectly offer a major advantage to investors coming from other regions, where the cost of interest is more in line with the global average of 4.8 percent. Additional investment and reforms are needed to help lower interest rates.

Most of Africa s 18 land-locked countries are heavily reliant on successful regional solutions, including intra-African trade, to boost growth.

Africa s Energy Deficit

Resolving Africa s energy deficit must also remain a top priority, Ezekwesili stressed, pointing out that only one in four Africans has access to energy. The averages are low: five in every 100 Liberians, and six in every 100 Ugandans. While South Africa is generally better off, its energy crisis is no less dramatic.

South Africa, which was already experiencing rolling black-outs as its economy overheated, was in fact saved by the global economic crisis, Ezekwesili said, explaining that had growth continued uninterrupted, that country s power supply would have never held up.

The World Bank is proud, she said, to be working with the South African government to resolve the problem through an upcoming loan to the country s power utility, Eskom. We will continue to do this in a responsible manner, combining renewable energy as the technology becomes increasingly available, affordable and tested.

With six Southern African countries entirely dependent on South Africa for their energy supply and with every one percentage growth in South Africa having an external effect of 0.5 percent on the continent, it is not only a South African problem that the Eskom project resolves, but a major problem for all of Africa.

Africa! The first buy signal in 22 years.

This article is meant to highlight global investors' growing interest in Africa. Dont be left out.

Read on....

Twenty-two years ago I told investors to clear out of all investments in Africa. I said, “Don’t look back. Africa will not recover from colonialism and apartheid for decades.”
That was good advice. Between 1975 and 2001, Africa’s per-capita gross domestic product fell an average of .7% per year. Since I issued that all-out sell signal, Africa effectively became a “lost continent.”
When apartheid fell — even though it was the best thing that ever happened to South Africa — I knew things were going to get worse before they got better. The country wasn’t prepared. Its systems weren’t ready for the newfound freedoms.
So even when it came to gold mining, I told investors to stay away from Africa. It didn’t matter how much gold was there. The economy was so bad, political strife and corruption so intense, that I saw almost no chance of making profits in Africa.
But all that’s finally changing. South Africa, in particular, is becoming a nation of growing prosperity. In 2005, the overall African economy expanded 5%, its fastest rate in decades. While 2006 figures have yet to be released, it’s expected that Africa as a whole gained about 5.5% for the full year.

There’s no question that Africa has a long way to go. AIDS and poverty are still mammoth issues. But I’ve seen enough data to convince me that things are turning around. And that’s why I think Africa could soon become the next big player to enter the world’s economic stage.
One reason ...
Africa Is a Direct Beneficiary Of the Global Commodity Boom
As the second largest continent on the planet, Africa covers some 11.7 million square miles and contains 53 countries. And it’s also home to some of the largest deposits of natural resources in the entire world.
Together, Nigeria, Angola, Algeria and Libya produce a substantial portion of the world’s crude oil. South Africa and several other African countries are a major source of the world’s gold output. Botswana and Sierra Leone are major sources of diamonds.
Africa is also home to some of the world’s largest deposits of chrome, bauxite copper, manganese, and uranium. Not to mention tropical hard woods, coffee, cocoa and rubber.
All told, Africa is home to:
88% of the world’s platinum group metals
80% of the world’s manganese
21% of the world’s gold production
26% of the world’s non-OPEC oil
80% of the world’s diamonds

So, by my very rough estimates, the commodity boom of the last few years has beefed up Africa’s balance sheet by at least $3 trillion. These huge assets now represent a highway to improvement for hundreds of millions of people.

Plus ...
China Has Been Making Big Investments in Africa
If there’s one thing that bugs me about the U.S., it’s the fact that Washington neglected the huge strategic importance of Africa.
Had we been there to help Africans after apartheid ended, not only would we have helped lots of impoverished people, we would have set the stage toward ensuring supplies of natural resources for the U.S.
But alas, Washington basically stayed on the sidelines. And now, while the U.S. is focused on the Middle East, North Korea and terrorism, it’s missing the boat.
China, on the other hand, is locking up one deal after another in Africa. In the last two years, it’s become Africa’s most powerful and strategically. China has:
Forgiven more than $1 billion in debt owed by 32 African countries
Become Africa’s largest trade partner, with trade growing 400% over the last six years (while Africa’s trade with Britain, France and the U.S. continues to shrink)
Become the continent’s largest foreign investor, recently offering $3 billion in low-interest rate loans and another $2 billion in export credits over the next three years.
Indeed, at the recent forum on Chinese-Africa Co-operation held in Beijing this past November, figures were cited showing that trade between China and Africa rose to $40 billion in 2005 from $4 billion in 1995. And Beijing authorities announced that they expect trade to rise to $100 billion over the next three years.

Moreover, in the past 12 months, at least 16 mega-contracts have been forged between Chinese firms and African governments. Four of them:
1. A copper mine in Zambia and a $230 million chrome mine and smelter in South Africa
2. A $2 billion oil-backed loan to the Angolan government
3. A $1.3 billion deal between the China Machine Building International Corporation and Zimbabwe to build a major coal mine and three power stations in the country
4. A $2.5 billion oil deal with Nigeria
To be sure, China’s government, which has one of the worst human rights records, is more interested in Africa’s huge natural resources than its people.
But it’s a step in the right direction for Africa. With more money and foreign investment, plus huge gains in the value of Africa’s gargantuan natural resources, Africa has a greater ability to make huge strides forward.

Investor Interest in Africa Is Picking Up:How You Can Invest in the Continent
Volume on the Johannesburg Stock Exchange is up 600% over the last decade. The value of listed companies on the exchange has surpassed $650 billion, making the JSE the world’s 17th-largest exchange (and Africa’s biggest).
As Africa’s economic growth accelerates due to rising commodity prices and foreign direct investment, investor interest should rise substantially in the years ahead.
The best part is that American investors are getting more and more ways to participate:
A slew of new American Depository Receipts (ADRs) of African companies are coming out. These stocks are traded on U.S. exchanges, but are essentially the same as buying their foreign-listed counterparts.

Plus, mutual funds are allocating more capital to Africa. For example, several natural resources funds now hold significant stakes in the continent.
And exchange-traded funds are also helping investors track different countries. For example, you can purchase the iShares MSCI South Africa Index Fund (EZA). Its 52 holdings give you a broad stake in South African companies, including names like Gold Fields, Ltd ... Impala Platinum ... Anglo American ... Harmony Gold Mining ... and Sasol, Ltd, one of the leading alternative energy companies in the world today.

My view: Africa is just beginning to emerge on the world scene. It will take decades for it to come anywhere close to the level of economic development we see in, say, India, let alone the typical emerging market.
But those investors who get in now, while Africa is still largely ignored, stand to make bundles of money. It’s been more than two decades since I issued my sell signal on Africa.
Now, I’m officially giving my buy signal, a green light to go ahead and start investing in Africa. I’ll have more details in an upcoming issue of my Real Wealth Report.

Best wishes,
Larry Edelson

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Welcome to Africa

From the horn of Africa in Somalia to Cape Verde, from Cairo to Cape Town. If you were to ever criss cross this continent you would have toured 53 countries. In doing so you would have met 6000 tribes or ethnic tribes and heard 2000 languages. This is the home of diversity. This is where 900 million people call home.

Over the last 500 years Africans have been the backbone of every major wave of change.
Africans were the backbone of the industrial revolution, feeding plantations with human labour. Today Africans are the backbone of the growth age, feeding the worlds industries with natural resources.
This level of Africa’s generosity remains its greatest strength and yet its greatest weakness. For in serving the world it has not served itself and in helping to develop the world it has not developed itself.
That was the story yesterday.

Today there is a new story.
Africa today offers the highest return on investments than anywhere else in the world. Millions of its young people are highly educated and belong to a rapidly expanding middle class and a whole lot more are expanding the frontiers of entreprenuership.
Hope has been found on a continent that is beginning to tell its own story. Faith is alive in the hearts of millions that this is the dawn of a new Africa.
This is the kind of Africa you do not see because this is the kind of Africa you do not look at.
Look again, and you will see the Africa I see. The Africa we should all see.

Like I read somewhere the other day, “hope is hearing the music of the future and faith is dancing to its tune today”. To all who dare to look Africa’s way, I say, come let’s dance.