Investing in Africa
Here is a bit of good news. According to the WashPo, investors unimpressed by sluggish growth in the United States and Europe are looking for other places to put their money and are turning to Africa.
Foreign investment is pouring into the continent at unprecedented rates, doubling in recent years to around $39 billion, according to U.N. figures. In recent months, some investors have even appeared convinced that Africa might be a safer spot to sink their money than the shakier U.S. and European markets.
“People are looking for diversification,” said Hurley Doddy, chief operating officer of Emerging Capital Partners, a private equity group based in Washington whose investments in Africa have jumped from $400 million in 2000 to $1.5 billion this year. “A lot of the problems the U.S. economy is having, you simply do not have that in Africa.”
Of course, one might just as easily say that the United States economy does not have the same problems as the African economy, and ultimately $39 billion is not a big chunk of the international capital market. The other issue that the article does not explore is the extent to which this direct investment is going into extractive industries, especially oil. Turning petro-dollars into wide-spread prosperity is a tricky matter, and too often the availability of huge amounts of easy wealth simply makes political corruption/kleptocracy easier. Indeed, it is no accident that in the U.S. three of the states that have traditionally had some of the most corrupt and dysfunctional political cultures — Louisiana, Texas, and Alaska — are also (or at least in the case of Texas, used to be) essentially petro-states.
Still, foreign investment in Africa is good. It would be better if the story were in the business section rather than the international section.