Africa - the new land of opportunity

American secretary of state Hillary Clinton's seven nation visit to Africa, underscored the fact that the continent has recently become a very popular destination for international leaders as the international community is starting to realign for a new global post-recession economic and trade dispensation.

All indications are that the changing global economic power relations is offering to those African resource rich nations, who are able to get their political and economic governance houses in order, a unique opportunity to become properly integrated into an economic upswing. Tremendous opportunities are also locked into this developing new scenario for South Africa as the continent's biggest economy.

Clinton's visit followed Barack Obama's one-day, one-county visit in June to Ghana. It was a visit that appeared to be no more than tokenism compared to Chinese president Hu Jintao's four nation visit earlier this year.

In June, Russia's President Dmitry Medvedev flew to Egypt, Namibia, Angola and Nigeria - the last two being Africa's biggest oil producers - to underscore Moscow's intentions not to be left out in the cold.

Africa's largest bank in assets, Standard Bank at the end of July said the extraction of bulk commodities may become Africa's new mining frontier, underpinned by a renewed corporate appetite to invest in certain African countries.

China, which has overtaken America as the continent's largest trading partner, is poised to play a key role in these developments.

Chinese companies have shown little let up in their push for African minerals, with Zonghui Mining Group signing a $3.6-billion copper agreement with Zambia in July.

Brad Breetzke, Standard Bank's director and head of project finance South Africa, was reported as saying that there "are significant opportunities in certain of these bulk commodities such as iron ore, coal and to a lesser extent copper.

Industrial and Commercial Bank of China (ICBC) is also working on up to 60 deals with Standard Bank, in which it bought a 20% stake for $5.6-billion in 2008.

But China is by far not the only shining light on the African horizon. Earlier this year, Dr Martyn Davies, executive director of the Centre for Chinese Studies at the University of Stellenbosch wrote: "Africa is beginning to form an important part of the value chain in emerging states' strategic thinking around long term food security. Africa's enormous under utilised agricultural resources is only matched by its potential."

Against this background, it is small wonder that Brazil, the world's largest producer of ethanol fuel, is also making its presence felt in Africa with offers of technology and know-how to boost food and biofuels production in Africa, where only a fraction of potential arable land is under cultivation.

As can be expected, due to the particular niche it occupies as an emerging economy, India's mobile phone giant Bharti Airtel is involved in a $23 billion bid to tie up with South Africa's MTN Group, Africa's biggest operator by subscribers. This is but one example of the many forays by Indian companies into the continent.

The potential locked-up in these developments for South African business, was well illustrated in a statement by First National Bank Commercial about the launch of a unique bank card solution for Chinese visitors to the country. The solution, in partnership with China's only bank card association, China UnionPay (CUP) enables card holders to make purchases in South Africa at FNB SpeedPoint terminals.

The service is aimed at Chinese tourists, who rank in the top five of the world's highest spenders, spending on average $900 on luxury goods per trip when abroad. In January this year alone, there were some 4 811 Chinese visitors to South Africa.

Factors like proximity, well established local mining and agricultural expertise, well developed financial and other services sectors and a strong, well established supply chain infrastructure, positions South Africa well to benefit from the evolving process that Ron Sandrey and Hannah Edinger, contributors to the book South Africa's way ahead: looking East, describe as follows: "...the global trading environment is a rapidly changing one... with virtually all countries in the world actively involved in bilateral and regional negotiations in some form or other."

But is also about more than just economic interests. America also hopes to establish strategic military bases in Africa under a project named US Africa Command (Africom).

It is highly unlikely that Clinton would have asked for the establishment of an operational military presence in South Africa. With operational bases or so-called "lily pads" in Namibia and Botswana, that is not needed, but she more than likely lobbied for greater sympathy for Africom, something towards which former president Thabo Mbeki and Defence Minister Mosiuoa Lakota were negative to the point of being hostile.

With new administrations in place in both the US and South Africa, indications are that relations between the two countries could be heading for better times. Indicative of this might also be the fact that a personal confidant and close associate of Obama, Donald Gips is heading Pretoria's way in September as the new US ambassador.

Sources:

1. Reuters report, 6 August 2009

2. Insights; Business Day; 29 July 2009

3. The China Monitor; Centre for Chinese Studies, University of Stellenbosch; May 2009

4. PambaZuka News, Issue 440; 2 July 2009

5. Mail and Guardian, 7 August 2009