Davos Special Report: Africa rising

Thu Jan 28, 2010 11:36am EST
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By Ed Cropley and Ben Hirschler

LUANSHYA, Zambia/DAVOS, Switzerland (Reuters) - With the stoicism demanded of all who hope to make money in Africa, Beauty Chama sits in her empty hair salon in a leafy town in northern Zambia's Copper Belt and looks forward to better times.

"We are waiting patiently until the miners start making their money," she said, fingering the heavy gold chain around her neck that testifies to past fat years. "Then we shall start making our money. It's only a matter of time."

Africa for the investor is like that: a story of boom and bust, where famine and disease are punctuated by coups and civil wars. For many, its tales of war and diamonds, tribal rivalries, plundered treasuries and secret Swiss bank accounts make it too risky.

Somalia is fast approaching its third decade without a functional central government, and the prolonged ill-health of Nigerian President Umaru Yar'Adua has created a troubling power vacuum in Africa's most alluring frontier market.

But after the implosion of such supposedly sophisticated or promising institutions as Lehman Brothers or Dubai World, the confidence of the Zambian hairdresser is finding echoes as far away as London, New York and Beijing.

The International Monetary Fund believes growth in sub-Saharan Africa will be 1 percentage point above the global average, and puts eight African countries in its top 20 fastest-expanding economies in 2010. Oil-rich Angola and Congo Republic will lead the charge with growth rates of more than 9 and 12 percent respectively, both beating China, according to the IMF's most recent projections.

"Africa," said Tara O'Connor of Africa Risk Consulting, "is the continent of the long game. It's not perfect, but the overarching trend is one toward entrenching political stability, which then allows businesses to operate much more consistently."

For some African countries, particularly those helped by Chinese investment and its thirst for energy and minerals, another boom may be approaching.   Continued...

<p>A girl selling apples by the roadside waits for customers outside the Angolan city of Lubango in this January 15, 2010 file photo. REUTERS/Finbarr O'Reilly</p>