FRANKFURT, Germany, Oct. 22 (UPI) -- Amid all the financial troubles of the last three months, the emergent economies led by China and India have done well, but in few places has the news been better or more welcome than that from Africa.
The world focuses intently on the tragedies of Darfur and Zimbabwe, but the striking economic achievements of Ghana and Tanzania and the impressive strides into world markets made by South Africa (now a serious car exporter) have received too little attention.
Long the laggard in the global economy, in the past three years both North Africa and sub-Saharan Africa have been growing at more than 5 percent a year. And the latest figures from the World Bank bear out the trend, reporting that Africa received a record $36 billion in foreign direct investment last year. During this weekend’s annual meeting in Washington, the bank forecast 6 percent growth for sub-Saharan Africa this year and 7 percent in 2008.
The investment figures are an underestimate since they fail to include the further sums of investment of the kind that has come from China, where (not necessarily good news for local employment) Chinese development projects have been planned, staffed and directed by Chinese labor. Indeed, the most striking feature of Africa’s recent growth has been the growing role of Middle Eastern, Indian and Chinese trade and investment.
The Asia-Africa Business Forum meeting in Dar-es-Salaam, Tanzania, in February symbolized the new investment interest in Africa. Dubai spent $2 billion to buy and is investing another $1 billion to develop the Cape Town port and waterfront.
Deals announced in July and August this year included a $500 million investment by Mobile Telecommunications Co. in the Republic of Congo, and another $500 million property venture from Dubai in Kinshasa. The Dubai-based investment bank Millennium Finance Corp. cut an even larger deal for a Dubai group to buy into Ivory Coast’s Banque Atlantique and Atlantique Telecom, and Qatar’s Venessia group is building a national oil storage reserve in Malawi. For the first time, landlocked Malawi will have more than 15 days supply on hand. The giant SABIC group (Saudi Basic Industries Corp.), the kingdom’s petrochemical arm, is with Qatar Industries buying into a $1.5 billion iron ore project in Mauritania.
India, with a diaspora of 2.8 million ethnic Indians in Africa (mainly in South Africa, Kenya and Tanzania) is taking advantage of these historic connections and its British Commonwealth links to deepen its ties and to negotiate new energy supplies. For example, India helped establish Nigeria’s military academy, and almost all senior ranks of Ghana’s military have attended Indian training courses. The big Indian corporations like the Tata Group, Reliance and Ranbaxy Laboratories have mostly focused on other countries that once knew British rule -- South Africa, Nigeria, Egypt and Kenya.
India's state-owned Oil and Natural Gas Corp., in alliance with Mittal Energy, part of the steel empire of Lakshmi Mittal, now has rights of first refusal over three blocks in a potentially $6 billion deal that was rushed through in the closing days of the last Nigerian government. Another $900 million Mittal deal to mine iron ore in Liberia is being reviewed by the Liberian Senate. Having bought the French steel group Arcelor, Mittal has taken advantage of its links to former French West Africa and is building a 467-mile railroad and a port in Senegal to support its mining operations.
Indian refiner Reliance Industries announced in September that it had bought a majority stake and management control of east African oil retailer Gulf Africa Petroleum Corp. for an undisclosed sum. The Indian media has also reported that Reliance is negotiating the purchase of a 50 percent stake in Kenya’s only oil refinery. GAPCO owns and operates storage and terminal facilities along with a retail distribution network in Tanzania, Uganda and Kenya, with more than 250 outlets catering to retail and industrial customers.
With a $1 billion investment agreement with Ivory Coast, another agreement to build a refinery in Nigeria’s Edo state and $100 million in oil development projects in Gabon, India is becoming an important investor in Africa. But it faces tough competition. India thought it had agreed to buy Shell’s 50 percent share in an Angolan oil block, producing 5 million tons of crude a year, for $620 million, plus a separate $200 million to the Angolan government for rail development. At the last minute, China offered a $2 billion aid package to Angola and scooped the deal.
India has persevered, bringing 300 African delegates to New Delhi last year for an India-Africa economic partnership conference. The Confederation of India Industry, hailing "a new synergy between Africa and India,” claims the event opened negotiations on $17 billion in new deals from oil exploration and construction contracts to software, health services, rice-milling machinery and rail, road and hotel construction.
India’s commitment to Africa, however, is dwarfed by that of China, whose trade with Africa has grown from $10 billion to $56 billion since 2000. In that period, China has invested $12 billion in Africa and built more than 100 food and raw-material processing plants, 3,500 miles of highways, 1,600 miles of railways, eight power stations and three ports, including a tanker terminal at Port Sudan. More than 800 Chinese companies are now operating in Africa, which now provides 28 percent of China’s oil.
In May, China hosted the annual meeting of the Africa Development Bank in Shanghai and announced a new credit fund of $3 billion, a new investment fund of $5 billion and also wrote off $10 billion in bilateral debts. Beijing will train 15,000 African professionals while sending agriculture experts and youth volunteers to work in Africa and double the number of scholarships given to African students.
In addition, China has pumped $4 billion in loans and credits to Sudan, agreed in principle to a new $7 billion investment package with Nigeria, and has provided 14 warplanes and patrol boats to Nigeria’s military. China’s Civil engineering Construction Corp. also outmaneuvered the World Bank to secure the construction and finance contact for the new Lagos-Kano railroad.
We seem to be witnessing around the Indian Ocean the emergence of a new hub of international commerce that we might call CHIMEA, for the separate but intertwined roles played by China, India, the Middle East and Africa. Arab capital and energy, along with Indian and Chinese skills and investments and markets, are combining to present Africa with its best opportunity in decades for economic takeoff.
