Sun over Africa

While the world is under the dark cloud of recession in most of its major economies, not all reports from Africa reflect doom and gloom.

At the time of going to print, news from the Zambian capital of Lusaka was that Western nations and lending agencies were committing to provide $1.4 billion for the expansion of transport and trade links in eastern and southern Africa to help the region boost economic growth.

Leaders of countries in the region were meeting in Lusaka to discuss plans for attracting funds for road, rail and port links as well as energy projects that could help spur regional trade and change the lives
of millions.

Transporting a single cargo of copper from the Democratic Republic of Congo to South Africa currently takes two to three weeks. In Europe, a similar journey would take a mere two days.

The cost of that delay is about $16 000 a week in lost interest alone, contributing to transport costs in southern Africa that are 70% higher than in Europe and the United States.

The conference in Lusaka, and other initiatives such as the development of transport corridors, are addressing these problems.

After his return from the G20 meeting in London, South African Minister of Finance Trevor Manuel spelt out how South Africa not only seems to have missed the worst of the recession, but also has some reserves and other cards up its sleeve for when the turnaround comes.

Unlike the US and the United Kingdom, South Africa has plenty of room for further monetary easing, so too our interest rates,
he said.

South Africa’s interest rates are still high compared with the developed economies that are its main trading partners. This means there is still an attractive yield differential for foreign investors.

At the same time, local households are poised for a recovery in consumption, with debt having dropped from 78% of gross domestic product to nearer 70%.

Zimbabwe is on the threshold of a turnaround in its fortunes, which holds strong promise and potential for South African businesses.

South African mining magnate Patrice Motsepe, who led a 22-member delegation from Business Unity South Africa (BUSA), returned upbeat from talks with President Robert Mugabe and Finance Minister Tendai Biti in Harare.

In this issue we report on how a recent book punts Africa as a continent of opportunities and Dr Denis Warroll writes on how the 48 countries of sub-Saharan Africa have many factors running in their favour. Both the  US and Europe are now taking Africa more seriously.

In South Africa, however, there is one major factor of uncertainty – the general election on April 22. How the country conducts its affairs after the election could impact seriously on Africa’s ability to finally shed its image as a continent of no hope – leaving South Africa with a responsibility much wider than just its own domestic affairs.

Piet Coetzer