EVEN AFRICA:

Stock in Africa going up: The flight of domestic money to foreign markets is one of Africa's most persistent problems. By Abraham McLaughlin, 12/11/03, CS Monitor)

A tiny tea-service bell rings delicately in a glass-walled conference room here in Botswana's capital. It's the small but significant sound of the country's stock and bond market springing to life - and of Africa's growing emergence into the globalized world of stocks, bonds, foreign investment, and, perhaps, into an era of less dependence on foreign-aid handouts.

This is hardly Goldman Sachs's bustling New York trading floor. But in a concrete-and-glass office park that's straight out of suburban America, three or four brokers meet twice a day to trade stocks and bonds. In doing so, they're also helping to tackle one of Africa's most persistent problems: the flight of domestic money to foreign markets.

An estimated 70 percent of Botswana's pension-fund investments - and roughly 40 percent of Africans' personal savings - go overseas. The United Nations estimates sub-Saharan Africa lost $187 billion in capital between 1976 and 2003. One reason: Investments in the US, Britain, and elsewhere are safe and profitable. But another big reason has been a lack of things to invest in here.

Yet with more and more stocks and bonds becoming available, Africa's money may increasingly stay home - and help jump-start everything from banks to airlines to manufacturing firms. All of which could lead to greater self-sufficiency - and to fighting poverty more often with economic growth than with foreign aid.

"The biggest problem in Africa is that people here don't reinvest in their own countries," says Rob Walker of Andisa Capital, a firm based in Gaborone. "But that's starting to change."

Does anything better demonstrate the self-destruction of the Middle East than that it's in danger of falling behind Africa?

Posted by Orrin Judd at December 10, 2003 7:39 PM