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DAVOS, Switzerland (Reuters) - Africa set out its stall in Davos this week, but selling the continent as an investment destination is tough.
Despite recent macroeconomic reforms and an impressive growth outlook, many investors remain wary of Africa.
"It is emerging as an important investment destination -- the evidence is there. I think what remains (to be seen) is whether investors see that opportunity," South African President Jacob Zuma said on the sidelines of the World Economic Forum.
One big handicap is a lack of scale and liquidity. A Reuters survey of leading investment houses this week found Africa and the Middle East together attracted less than 1 percent of a typical global equity portfolio and barely registered when it comes to bonds.
The same issue affects Africa's nascent private equity sector.
"Africa is not capital short. It is transaction short," said Paul Fletcher, senior partner at private equity firm Actis, which specializes in investing in Africa and other emerging markets.
Still, the continent is raising its profile in the financial markets and Donald Kaberuka, president of the African Development Bank, said planned bond issues from various African countries were an important step in the process.
Plans to issue international debt have largely been on hold due to the global financial crisis, but several African states -- including Angola, Tanzania, Kenya and Zambia -- are starting to look for new issuance this year.
Kaberuka is confident that Africa's economic growth will revive this year and accelerate in 2011, following the blow from the global recession which hit commodity prices hard.
"We have the highest level of growth in 30 years," he said. "What this crisis has done is interrupt it momentarily -- it has not stopped it."
Even Zimbabwe, after a decade of chronic economic contraction and social and political turmoil, is urging investors to consider its possibilities.
Prime Minister Morgan Tsvangirai told reporter in Davos he believed the process that led to creation of a unity government last February was irreversible and that it was time for Western donors and investors to return to the country.
"Certainly the country is moving forward, and this is a time to look at the country in a more positive light," he said.
For North Africa, in particular, Dubai's debt crisis has also unsettled investors, although the impact may be temporary.
"We've been watching Dubai to see the impact on some of the investments in North Africa, but I'm confident investment is going to pick up again," Kaberuka told Reuters.
"In most African countries the climate is improving dramatically."
For 2010, economic growth across Africa is expected to be at least 4 percent and for 2011 he said it could rise to maybe 6-1/2 percent.
Editing by Mike Peacock