The question is no longer whether to invest in Africa, but where to invest, writes Leon Louw.
We have gone from: Africa: the hopeless continent (The Economist, May 2000) to Africa Rising (The Economist, December 2011) and back to the Aspiring Africa (The Economist, March 2013) in a little more than 13 years.
When Africa made it onto the front cover of The Economist way back in 2000, it was a momentous occasion. That the continent was ‘rising’ 11 years later might have been earth shattering for some, but for many doing business on the continent, it was mere confirmation of a significantly improved business environment. And that has not changed, despite the back to ‘aspiring’ cover two years later, in 2013. Since then Africa has not made it onto the front cover of one of the most coveted magazines in the world.
The ‘forgotten continent’ has defied all odds though, since that dreadful cover in 2000 and has proven analysts, theorists and futurists wrong time and time again, and it continues to do so. Africa remains an enigma. Thus, to predict the continents future, is like sticking your head into an ant’s nest in the middle of the Congo rainforest on a hot summer’s day. However, as the editor of a magazine called African Mining, and as someone who holds postgraduate qualifications in African Studies and African Politics, and punts himself as a specialist in African affairs, I feel obligated to share my thoughts about which African countries (I think) are rising, those that are aspiring – and red-flag one or two that could be regarded as hopeless.
From being regarded as a ‘breadbasket’ then a ‘basket case’ and now a country ‘open for business’, Zimbabwe epitomises what international investors fear most: uncertainty, inconsistency and instability. Although Zimbabwe seems to be back on the highroad again, it will take many years before business confidence returns after Robert Mugabe’s misrule. Nonetheless, mining or mineral exploration companies are keeping their ears close to the ground. Zimbabwe has moved from ‘hopeless’ to ‘aspiring’ to ‘rising’ in a very short space of time, but that can change again, so for me, the jury is still out.
Ditto for South Africa, where President Cyril Ramaphosa’s renewed focus on the economy is reaping rewards, but there are still remnants of the old guard in the ANC that might put a spoke in the ‘New Dawn’ wheel. However, Angola is rising, and is my pick for southern Africa.
President João Lourenço has rung the changes and seems to be hell-bent on eradicating corruption. It appears that the government has, furthermore, made an ideological U-turn and they are, apparently, welcoming private investors with open arms. Geologist love Angola, and mining companies will follow.
Botswana and Namibia are stable, but, sadly, Zambia and Mozambique have lost the plot. Although both these countries have a lot of potential and huge deposits of copper, coal and gas, hiding debt levels is not the way to solve fiscal problems, and all indications are that Zambia is heading for an economic disaster. Mozambique has survived the worst, but it will have to claw its way out of a big hole. Both these countries, for me, are close to being ‘hopeless’ cases, but, again, that can change very quickly, especially in Mozambique, where the Rovuma Basin oilfield holds the key.
Personally, and certainly for mining companies and exploration outfits, the most exciting region is West Africa. Not only because of the fabulous deposits, but because democracy is tightening its grip on a region once ravaged by civil wars, coup d’états and dictatorships.
Ghana remains stable, and with oil production imminent and democracy entrenched, it continues rising as is its neighbor Nigeria. Not many people would agree, but Nigeria is a huge market, has great mineral deposits (in addition to its oil deposits), and the government is working hard at diversifying the country’s economy. It does appear that Boko Haram has become, at least for now, more subdued. However, Nigeria has many challenges, and it will always be a gamble investing in this vast and varied country (as MTN will attest).
The brightest star in West Africa is Côte d’Ivoire. The country has recovered from its recent political turmoil, it has brilliant mineral deposits, and the government is pulling all the strings to lure investors, and it’s working. Mining companies love Côte d’Ivoire, and so they should. On the other hand, once troubled countries like Sierra Leone, Liberia, Guinea and Mali are ticking over, but can best be described as aspiring.
Once its rising star, many now describe Tanzania as the ‘basket case’ of East Africa. The country’s president, John Magufuli, continues beating the nationalisation drum, which is enough, on its own, without slapping on crippling tax penalties or meddling in private affairs. Magufuli might just prove us wrong, but at current rates, Tanzania is on a runaway train to ‘hopeless’ and it won’t be easy coming back.
On the contrary, Kenya, Rwanda and Ethiopia are soaring. If I was a betting man, Ethiopia is where my money would go. Ethiopia is growing at a frightening speed, and although it is still a closed economy (and there are security concerns), that might change very soon. Its recent peace pact with Eritrea bodes well for the country’s future.
North Africa is, in a way, still recovering after the Arab Spring but Morocco, Tunisia and Egypt are all on track. So, what is the most disappointing country? This is where I’ll pass the buck and keep my head in that ant nest, as it might be safer in there. The jungle has become a tad too risky, even if you have a big appetite for risk.