NEW YORK-Playing to a packed house, speakers at a recent New York Society of Security Analysts “Invest in Africa ’97” conference said countries and companies on the continent deserve a look by investors.
“It is encouraging to see the audience here. It is a sign of Africa’s increasing viability,” said Amos Midzi, Zimbabwe Ambassador to the United States and Economic Committee chairman of the African Ambassador’s Group.
“The infrastructure need for us is critical-roads, ports, railways, telecommunications.”
Asked about telecommunications in particular, Midzi replied, “In the past, Africans tended to emphasize public ownership, but now there are various degrees of more and more privatization. In Zambia, for example, it already has happened to some degree, and Zimbabwe is considering it now.”
To encourage foreign investment, African nations also are in the process of updating their accounting systems, Midzi said.
However, Patricia McQueen said, “I probably will be the most cautionary person on the panel.” She is vice president of advocacy in financial reporting and accounting for the Association for Investment Management and Research, New York.
“The key concerns if you’re thinking of investing in Africa are the qualification and training of accountants, audit procedures and practices, off balance sheet assets and liabilities and the reputation of the company’s management,” McQueen said.
In many cases, the last criterion may be most important because “it’s very easy to move cash out of a company,” she said.
Midzi also said various countries have assembled themselves into regional groups to promote regional economic development, recognizing that the gross domestic product of many individual African nations is too small to justify large-scale foreign investment.
“Sailing into the 21st century, there are profiles of a continent in transition easier to express for Africa’s economies today than for its politics,” Richard Hall said. He is a professor of African studies at New York University, senior adviser-Africa for Political Risk Services and a principal of African Consulting Associates.
“This is due largely to macro-economic reforms initiated in the early ’90s,” Hall said. “Trade policies have been liberalized. State-owned industries have been privatized. Inflation has been brought under control. Foreign exchange and import licensing rules have been abolished or reduced. Infrastructure is being developed. Investment codes are being recast to encourage portfolio and direct investment. There are new stock exchanges.”
The growth in stock exchanges had resulted in a number of larger pension funds and other companies looking at Africa as a possible investment opportunity. “I’m getting more and more inquiries from companies that hitherto have not shown any interest in Africa,” he said.
The result of these developments is that economic growth, albeit starting from a smaller base, is likely to be higher next year in African nations like Mozambique, Namibia, Mauritius and the West African nations than in many Asian countries, he said.
“You can expect a considerable shift in investment from Asia to Africa for improvements in telecommunications and infrastructure,” Hall said.
Among the best African countries in terms of stability in capital markets, consistency of economic policy and high literacy rates are the Ivory Coast, Mauritius, Kenya, Ghana, Zimbabwe and South Africa, Hall said.
The silver lining has a dark cloud, however. There is severe strife within certain countries and the new and unlawful willingness of some countries to intervene militarily in their neighbors’ affairs.
“Africa has many democratic constitutions but few democratic states. It’s a sad fact that most African leaders still see democracy as a threat, not a benefit,” Hall said.
“Capitalism doesn’t depend on democracy. Authoritarian regimes are good in the short run for political stability and they are pursuing market liberalization,” he said.
Computer, satellite and wireless communications development-a cornerstone of economic advancement policies advocated by those in control-will speed the growing grass-roots democratic movement springing up in many African nations, he said.
“There is a Swahili saying. `You cannot turn the wind so turn the sail.’ Africa is turning,” Hall said.
