October 14, 2012

hISTORY ENDS EVERYWHERE:

Africa next: With investment outpacing aid, is this a new golden age for the poorest continent? (GEOFFREY YORK, 9/22/12, The Globe and Mail)

As investors and traders pour in, some of the poorest corners of the continent are being transformed. "Tomorrow's Africa is going to be an economic force," says a report from Goldman Sachs. KPMG trumpets the Africa story as "the rise of the phoenix."

Many factors have made this possible. After decades of stagnation, in recent years most African countries began to reform their economies. Wars, coups, political instability and disease have declined since the late 1990s. And rising commodity prices have lured investment in African resources.

Mobile technology is leapfrogging ahead (Africa has become one of the fastest-growing markets for Canadian firm Research in Motion's BlackBerry) and a new consumer class has been born. Multinational retailers are leaping in, and even Wal-Mart recently acquired a chain with nearly 300 stores in 14 African countries.

The prosperity of China has been a particular spark, with about 2,000 Chinese companies investing $32-billion in Africa by the end of 2010. Beijing's trade with Africa has soared from $2-billion to an incredible $166-billion in the past dozen years.

But what is the truth behind the hype? The Globe and Mail has spent months investigating the African boom, journeying from Congo and Burkina Faso to Liberia and Botswana, talking to everyone from miners and farmers to factory owners and chief executives.

The rise of Africa is an issue with huge ramifications for Canada, since it could affect how we tailor our foreign aid, how our mining and energy companies choose their next targets and where our manufacturers will find their future markets. Yet the realities are obscured by lingering clich├ęs about Africa and an unwillingness to consider the social costs.

As foreign investment mounts, it often brings with it traumatic social dislocation and a distorted economy. The money often disappears into the pockets of a corrupt elite, while ordinary Africans see fewer benefits. Oil-rich countries such as Nigeria and Angola are the most extreme examples, where billions of dollars in oil revenue have gone into the foreign bank accounts of top officials, leaving most of their citizens poorer than ever.

It does not have to be this way. A few African countries, such as Botswana and Ghana, have carefully managed their resource revenue and transformed themselves into middle-income countries. Botswana has capitalized on its diamond mines by creating a fledgling industry in diamond sorting and processing, and it is increasingly seen as a model for the continent.

The small West African nation of Sierra Leone is seeing both the best and worst of the trend. Just a decade removed from an era of brutal warlords and blood diamonds, it is seeing its hopes rise dramatically. But, as in even the best-performing African countries, the boom threatens to create two solitudes, between the Sierra Leoneans who will be on the winning side and those who risk losing hold of what little security they already had.

Sierra Leone is one of the poorest countries on Earth. Most of its six million people survive on less than a dollar a day. Founded by British traders and freed colonial slaves in the 18th century, its capital, Freetown, is filled with vast slums built on the edge of huge smouldering garbage dumps. Children dodge among the smoke and flash fires to collect metal and plastic scraps for recycling.

Visitors to Freetown's beach restaurants are mobbed by war amputees who beg for a living. The city is plagued by power shortages. To reach it from the airport, visitors must take a rickety speedboat or an overcrowded ferry across an estuary. (Politicians keep promising a bridge and a new airport; nobody knows when they will be built.)

Yet Sierra Leone is also one of the world's fastest-rising economies. Its growth rate is projected to be a world-leading 34 per cent this year, according to the International Monetary Fund.
Posted by at October 14, 2012 8:03 AM
  
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