Friday, December 18, 2009

Now’s the Time to Invest in Africa - Harvard Business School


by Paul Collier and Jean-Louis Warnholz

Over the years many misguided pronouncements have touted the improved economic prospects of Africa, home to a large proportion of the world’s billion poorest people. The late 1990s even saw a slight economic resurgence, dubbed an “African renaissance,” but it fizzled, and a gloomy view of the continent as too unstable for investment other than in mining and oil seemed to settle over corporate boardrooms.

But reliable data show that a number of sub-Saharan nations have emerged from conflict in stable condition and that new macroeconomic forces are poised to have a profound effect – despite the global economic downturn. For example, the International Monetary Fund’s World Economic Outlook, re-leased in October 2008, projected economic growth of 6.3% for sub-Saharan Africa in 2009, with Uganda, Tanzania, and Nigeria exceeding 8% growth. Our research on African companies indicates that the continent offers competitive manufacturing sites, IT outsourcing, and construction services. There is real opportunity on the ground in Africa.

Multinationals and investors should bear these developments in mind:

Stability. The periods of catastrophic government action that slowed growth in past decades have become much less frequent. The failures in Ghana, Uganda, Tanzania, and Nigeria in the 1970s and 1980s were profound learning experiences for those countries, which have joined the list of today’s success stories. Nigeria, for instance, has paid off its external debts, enacted prudent fiscal rules, and cleaned up its banking system.

Policy. The more favorable policies of developed nations have laid the groundwork for growth: Many of Ghana’s exports, for example, qualify for duty-free access to EU and U.S. markets. Policies within African countries have boosted local economies: Rwanda, for instance, has made information and communications technologies the cornerstone of a new growth strategy, setting up the ICT Park in Kigali, its capital.

Profits. Our study of 2002–2007 financial data from all the Africa-based publicly traded companies for which data were available (a total of 954, mostly in manufacturing and services) shows that many of these firms are highly profitable. (For foreign-owned companies we looked only at the performance of the African entities.) In part because of low labor costs and gains in operational efficiency, the average annual return on capital of the companies studied was 65% to 70% higher than that of comparable firms in China, India, Indonesia, and Vietnam. The median profit margin was 11% –better than the comparable figures for Asia and South America. Our analysis of World Bank data on 1,869 African companies confirms these findings.

Opportunity. Construction companies, call centers, and IT services are among the region’s most successful businesses. The engineering services company Gasabo 3D Design, located in Kigali’s ICT Park, uses computer technology to transform drawings into three-dimensional models for customers at a highly competitive hourly rate of US$10.

Years have passed since investors updated their view of Africa’s promise. The time is ripe for multinationals to rethink sub-Saharan opportunities and simultaneously to help the region achieve its promise by contributing much-needed capital, business skills, and global connections.

Paul Collier, author of The Bottom Billion (Oxford, 2007), is a professor of economics and the director of the Centre for the Study of African Economies at the University of Oxford in England. Jean-Louis Warnholz is a researcher at the Centre for the Study of African Economies and a consultant on business development in emerging markets.

Return to the HBR List 2009 table of contents.

Sunday, December 13, 2009

India builds on Sudanese oil interests

India is in talks with Sudan about increasing its energy interests there, the Indian government said on Tuesday, having invested more than $2.5bn in the African state’s oil over the past six years.

The two governments signed a deal in New Delhi on Tuesday to pave the way for increased oil production and exploration and infrastructure development.

Oil investment in Sudan is controversial. China has been attacked for investments seen as helping to prop up an unpopular regime accused of human rights abuses and war crimes. However, participation by energy-hungry India has gone largely unnoticed.

Sudan fought one of Africa’s longest running civil wars, which claimed the lives of millions until 2005, when a peace deal was signed between the Arab-led north and rebels in the Christian and animist south.

More recently, President Omar al-Bashir’s National Congress Party was issued with an arrest warrant by the International Criminal Court for allegedly masterminding a campaign of rape, murder and displacement in Darfur, a western region of Sudan plagued by conflict over the past six years.

The Sudanese leader now ranks alongside Slobodan Milosevic, the former Yugoslavian president, and Charles Taylor, the former Liberian leader, the only two other heads of state indicted for war crimes while in office by international tribunals.

“India is your long term partner for energy co–operation . . . We guarantee demand in the buyer-seller equation,” Dr Shashi Tharoor, India’s minister of state for external affairs, said on Tuesday at a conference on Delhi’s pursuit of energy resources in Africa. New commitments to invest in Africa came only days after the World Bank said it was in talks to finance the expansion of Indian Railways to help it improve transport systems in Africa.

ONGC Videsh, the state-owned Indian oil company, is the main Indian investor in Sudan. The company is also eyeing a lucrative joint stake with state-owned Ghana National Petroleum Corporation in Ghana’s Jubilee field, which is owned by Kosmos Energy of the US.

Murli Deora, India’s oil minister, said: “We are particularly keen to participate in upcoming exploration and production opportunities in Angola, Ghana, Sudan, Nigeria, Uganda and Cote d’Ivoire. We offer . . . expertise in several fields.”

Angelina Jang Teny, Sudan’s minister of energy, encouraged Indian companies to “exploit responsibly” the African state’s hydrocarbon wealth and said there was great potential for her country's relationship with Asia's third-biggest economy.

All roads lead to Africa - EMRC

When it comes to new horizons for investment and entrepreneurial opportunities, all roads lead to Africa, according to EMRC - organisers of the Africa Finance & Investment Forum 2009. The event will be held from 13 - 15 December 2009 at the ABN AMRO Bank Headquarters, Amsterdam, the Netherlands.

This positive shift means that certain territories are being pinpointed for potential development as their determination for change and new beginnings attracts mounting global attention. The growing commercial interest in Africa, stemming from international banks, multinationals and medium-sized enterprises based in Europe, America, India and China, only serves to confirm this impetus, says EMRC - further fuelling the growth in confidence of both African stakeholders and the curious onlookers.

EMRC believes that it is an exciting time for Africa, and that now is the time to join this momentum and play a part in ensuring that the development is sustainable - with the end goal of creating a better future for the African continent and its people.

“In the last few decades Africa's rich natural resources and raw materials have provided investment opportunities for foreign companies, particularly her metal, petroleum and diamonds. Today it is the continent with the largest quantity of unexploited arable land, where climatic conditions are perfect and water is sufficient. While the world is struggling with an ominous food shortage, Africa offers favourable circumstances for large-scale food production that could potentially resolve this - what is required is better equipment, the right technology, and the sharing of expertise through skills development and training. We believe Africa offers an ideal option for foreign investors and partners who are seeking out new, plentiful opportunities,” cites Idit Miller, managing director and vice president of EMRC.

EMRC aims to act as a catalyst for the promotion of economic and trade relations between the interested business leaders from around the world, and project owners and managers from Africa.

“We demonstrate and promote Africa's emergence as a key player and a viable choice for solid investments on the global economic stage through our annual forums (Africa Finance & Investment, Agribusiness Forum), our EMRC Project Incubator Award, Tailor-made Projects and our Economic Missions,” explains Miller.

The theme at the Africa Finance & Investment Forum 2009 (AFIF09) is Partnerships for Growth & Development. AFIF09 brings together entrepreneurs, financial institutions, development agencies and government officials to analyse investment and trade opportunities and discuss current trends and opportunities in Africa.

The Africa Finance & Investment Forum 2009 aims to ignite concrete business partnerships, foster dialogue and reinforce a united commitment to the sustainable economic development of the continent.

“It is only when the right partnerships occur that they persist,” says Miller.

In this regard, EMRC actively pursues the 8th objective of the Millennium Development Goals - “establish partnerships for development”.

“A good partnership everywhere in the world, and Africa is no exception, is when the parties consider the investment and benefit for each one of them, when we consider each other as equals and when we try to give and not only to take. It is therefore important that companies that stand to profit from Africa's natural wealth give back to it by way of social upliftment projects, particularly within the health and education sectors; but also by investing in Africa's economy through developing its industry and agriculture, in partnership with local entrepreneurs,” concludes Idit Miller.

For more information regarding AFIF09, go to www.emrc.be or email info@emrc.be.

[19 Nov 2009 10:43]

European investors now target Africa’s unlisted firms

European private investors are hungry for shares in unlisted African firms and could provide the needed shot in the arm for a continent that has taken a beating from the financial crisis the West is emerging from, reports LEE MWITI

The uninspiring granite exterior of the London Stock Exchange provided the quiet backdrop for a meeting that would almost have gone unnoticed, if it did not have such a strong bearing on Africa’s growth prospects. A fortnight ago, Rwanda President Paul Kagame, former British Prime Minister Tony Blair and African Development Bank (AfDB) chief private equity officer Martin Poulsen were on the roster of speakers at the one-day executive summit on private equity placements in the continent.

Insiders at the discussions say new growth opportunities topped the agenda with leading industry group Emerging Markets Private Equity Association (Empea) reporting that fundraising activity in sub-Saharan Africa has almost tripled from $800 million in 2005 to $2.2 billion in 2008.

Analysts interviewed by Africa Insight spoke of a gradual shift in thinking, with the private sector being seen as providing the needed growth momentum for a continent that has taken a beating following the financial crisis that western markets are emerging from. The credit squeeze halved Africa’s growth rate from 5.7 per cent in 2008 to 2.4 per cent in 2009, according to World Bank estimates.

Bank crisis
The Nigerian bank crisis — in which banks were left holding toxic assets following a loaning spree— means that investor confidence in the continent’s public equity has taken a knock and they are now looking at private equity—the taking of shares in unlisted companies – as a more viable option.
“If investing in Africa has to face the downsides of private equity, it should have the upsides as well, hence the greater focus on private equity and special situations opportunities,” said Mr Michael Hugman, Emerging Markets Analyst for the South African Standard Bank.

President Kagame’s presence may have been interpreted to mean that while investors were willing to pump in more money, they will also need reassurance that their investment would be safe in a continent where returns are high, but the risks even higher.

Increased money from natural resources and better business policies are seen to be driving the increased interest from yield-hungry Western investors looking further afield as they seek to diversify their portfolios. Rwanda, with a driven reform project, was the top gainer in this year’s Doing Business 2010 Report, indicative of the President’s quietly effective crusade to sell the tiny eastern African nation as a business hub.

The AfDB also seems to have latched on to this thinking. The bank is set to commit some 20 per cent of its private sector budget –about $200 million – to private equity lending on the continent. It will, however, be seeking to strike a balance between its development mandate and investors’ appetite for big returns. “Africa equity is a sector that is unproven,” Mr Poulsen said, adding that risk was the big factor in the reticence by equity funds to put their money in the continent.

The expected renewed investment means that countries such as Nigeria, Kenya and Ghana, which have advantages of scale, are likely to be the big gainers, as are those such as Rwanda, which have a stable macroeconomic policy and limited political risk.

Mr Blair, who last year formed his Africa Governance Initiative, has been an enthusiastic supporter of private sector investment in the region. “Many still hold a number of misconceptions about Africa which are no longer valid; there are a large number of untapped opportunities. The time is right to invest in Africa,” he told the London summit. Mr Blair is an unpaid adviser to Mr Kagame and Sierra Leone President Ernest Koroma, whose country was named the easiest place to do business in West Africa.

A trade fair attended by the Prince of Wales, Mr Blair, representatives of the UK and US governments, including the UK International Development minister, Mr Gareth Thomas, and hundreds of potential international investors demonstrated the growing interest in the region.

Attracting magnates
Billionaire George Soros—worth $7.2 billion—was among the speakers at the Sierra Leone Trade and Investment Forum in London and attended by a high-level Sierra Leonian delegation led by Mr Koroma.

The UK’s CDC group—a development finance institution— recently announced that it would invest $5 million in the Sierra Investment Fund (SIF), which makes investments in small and medium sized businesses in the West African nation, the first international financier to do so. Given the illiquid nature of private equity, the region’s numerous trouble spots could well miss out on the expected boom. Giant

British energy firm Globeq has just pulled out of a Ksh46 billion wind farm power project in Kenya due to what it said was its inability to secure a controlling stake in the project, suggesting that investors will be demanding more clout – such as leveraged buyouts – in any deals they cut on the continent in order to mitigate against risk.

“The risks inherent in emerging markets investments mean that investors will expect signs of added commitment from general partners,” said Ahmed Heikal, the founder of the giant Citadel Capital, which has a reported $8.3 billion in investments in the Middle East and North Africa, according to equity tracker Private Equity International (PEI). However, there is a growing feeling in the market that the traditional fundraising model in emerging markets has to evolve if it is to meet investor needs.

Africa’s private equity market is still modest by global standards, with South Africa fund managers controlling up to 80 per cent of the sub-Saharan Africa. Nigeria has about 10 per cent of Africa funds. The private equity landscape in the region is still largely uncrowded and competition thin, but the industry is evolving as investor appetite has fundamentally changed over the last several years.

The 2009 EMPEA/Coller Capital Emerging Markets Private Equity Survey reveals that institutional investor interest in Africa has grown, with 38 per cent of private equity firms surveyed currently investing in Africa versus only 4 per cent in 2006.

Infrastructure and services have been particularly attractive to speculators, and are likely to see even more interest with a new World Bank report released last week pointing to potential opportunities on the continent. The study prescribes an annual investment of $93 billion a year—15 per cent of the region’s GDP—to meet the continent’s needs.

Africa Insight is an initiative of the Nation Media Group’s Africa Media Network Project.

Risk and reward of investing in Africa

CAIRO: Remi Bello, co-founder of B&M Consulting – formally Bello & Manchau Political Risk Consultants – talked to Bikya Masr recently on focusing on the risk and reward of investing in Africa, responsible investing and China’s role in creating stability for Africa.

“Africa is the next investment frontier,” says Bello, keen on increasing Foreign Direct Investment (FDI) and using investment on the continent, partially as a tool for creating growth and development and creating the conditions for bettering the lives of everyday African’s.

In one of the poorest regions on the globe we see countries with copious amounts of natural resource wealth, however the list of endemic problems Africa faces is as long as an elephants trunk.

The recent history of Africa is littered with examples of countries, companies and private entrepreneurs alike drawn to Africa’s bounty of natural wealth. After the break-up of empire post WWII many modern African nation-states fell into instability that was often exploited by big business hungry for African resources. As a result today countries like Angola, Nigeria and Sudan have scrambled for control over resources resulting in civil war and the deaths of thousands induced by a heady mix of government corruption and neglect. Companies like British petroleum and De Beers were quick to capitalize over these situations.

Bello is quick to point out “there’s a lot of truth to the fact that African countries are not stable despite the opportunities that are available there’s a lot of instability to go around,” he argues this has made investors wary of putting money into the continent. “Our clients realize that in order to deal with such levels of instability that they need partners on the ground who understand the situation who can help them to progress in these unique challenges.”

B&M Consulting joins a raft of companies that focus on political risk in developing regions, but as Bello points out “we focus exclusively on African countries.”

“What that does for us and the added value for our clients is that we can be much more comprehensive than our competitors can be. We can work not only at the continental level but we can work at the regional level we can work at the country level we can work at the provincial and state level and we can also work at the municipal level and we can work on the sector and industry level. This level of thoroughness has not been heard of within our industry. So we are willing to get the details on behalf of our clients and that’s what separates us from the crowd.”

B&M see opportunities even in some of the most unstable countries, like Somalia, which has not had a functioning government since 1991. “Despite the instability Somalia still presents investment opportunities for those that are creative enough to deal with the instability. The fighting has led to a complete massive breakdown of infrastructure which presents opportunities to the savvy investor,” he adds.

The risks of doing business in Africa can be great and the area with most risk is energy. “Energy is a key sector for African countries because this is what is driving growth. If you look at China’s interest in Africa it’s primarily energy driven.”

As financial institutions across the globe continue to shake, Bello points out “the market place for African commodities is increasingly shifting from developed countries to the emerging or ‘BRIC countries’. That is Brazil India Russia and China. It is the voracious appetite of these rapidly growing BRIC countries that is fulfilling the commodities demand void helping commodities prices recover right now.”

The IMF in July this year projected Africa’s growth for 2010 at 4.1 percent, however B&M think the figure will be closer to 4.5 percent. “We believe that increased interests on the part of the BRIC countries in Africa will drive Africa’s growth next year.”

While China’s role in Africa has led some commentators to argue a new form of colonialism is emerging, Bello points to the positive effects of China’s increased interest. “China is helping to build new infrastructure across Africa new roads railways hospitals and schools means increased local productivity and growth Chinese build roads that are helping African farmers transport their raw commodities to the market place. Chinese built telecommunications towers are helping small-scale rural African farmers receive the latest advancements in agricultural science from experts in the cities.”

China, notorious for hiring Chinese nationals for projects in Africa is countered by Bello. “Anybody that has been to Africa recently will tell you that they receive a throng of locally run businesses that surround every Chinese construction site. All these seemingly minor benefits add up,” he argues.

Bello does not see a new cold war being fought out in Africa but admitted America and Europe have been forced to re-think their strategy in vying for African resources due to the increasing power on the part of the BRIC countries. “Not only is China bringing these infrastructure projects as I described they are also sparking a race that will ultimately benefit Africans they’re sparking a race where by European powers and the United States are starting to rethink their strategy as they pertain to African countries,” the expert continues.

The discovery of oil in African countries is just as often described as a curse than as blessing, and while there are disaster stories, like Angola (sub-Saharan Africa’s second-largest petroleum producer) who suffered a bloody civil war from 1975 to 2002, there are also success stories like Ghana, who’s stable government and transparency is marked with a high level of maturity and stability.

On the question of responsible investment in Africa, Bello responded with “At B&M Consulting, we believe corporate social responsibility is one of the most effective political, social, economic and security risk management tools. Corporate brands and infrastructure that take decades to build can easily be undermined and threatened by exposure to a broad variety of political risks.”

Bello, an American Nigerian who has spent much of his childhood and adult life on the continent sees Africa as not being “as challenging to navigate and invest in as people perceive.” While investment in the past has often led to corruption and poor governance, perhaps this time around with new interest Africa may grow.

BM

German investor snaps up Zim bank

A German financial services firm, African Development Corporation (ADC), has bought a controlling stake in a small Zimbabwean bank, officials said Thursd ay.

The officials said ADC bought a 54 percent stake in Premier Finance Group Limite d for US$6 million.

Premier Finance Group Limited offers a variety of banking and other financial se rvices, but has been struggling to survive of late in a saturated market dominated by bigger transnational banks.

"We will welcome the new shareholder and consider this as significant step in en hancing the current product portfolio and service offering," bank chairman Sengi Mlambo said.

ADC chief executive Dirk Harbecke said the investment in Zimbabwe was part of wi der investment in Africa which the corporation had either made or was considering.

"ADC investment demonstrates our confidence in our local partners and the future of Premier and the prospects offered by the Zimbabwean economy," he said.

"We are looking into investing in Africa and we have already invested in Rwanda, Equatorial Guinea and South Africa and as of last year we started investing in Zimbabwe," he added.

US group urges corporate America to invest in Africa

WASHINGTON (Reuters) - Africa urgently needs investment from corporate America for the billions in annual aid to become effective, the head of a U.S.-Africa trade advocacy group said on Thursday.

Stephen Hayes, the president and chief executive officer of The Corporate Council on Africa, said investment by U.S. companies in Africa was not enough, and the Obama administration should formulate a strong policy to address this.

"We have a foreign policy crisis on our hands in terms of our U.S.-Africa relations. If you don't have investment in Africa, aid becomes ineffective," Hayes told a panel on sustaining growth in sub-Saharan Africa at the Brookings Institution.

"The president has to say Africa is important ... we don't realize how Africa is important to us."

But Treasury's Deputy Assistant Secretary for Africa and the Middle East, Andrew Baukol, said the United States was committed to Africa and was working with various countries in areas of infrastructure, finance, agriculture and food security and improving business climate.

Investment by companies in Africa, which has been hard hit by the global financial crisis and recession, has been frustrated by high levels of bureaucracy and corruption as well as insufficient infrastructure.

Even if corporations were interested in doing business in Africa, banks were too risk averse to provide funding for business ventures in the continent, Hayes noted.

"Unless you have a partner on the ground, it's hard to become invested in the country," he said. "We need to start developing a new vision toward Africa."

The International Monetary Fund estimates that output in Africa will expand by just 1 percent this year, after growing about 6.5 percent annually between 2002 and 2007 -- which was the highest rate in 30 years.

Growth next year was expected to pick up to just over 4 percent.

Mali, where climate change talks mean life or death

Biofuel and solar panels are being used to counter the effects of climate change in Mali, one of the world’s poorest countries. In the second of two reports from the West African country, Farming Editor Steve Dubé explains what Africans want from the climate change summit in Copenhagen

MOTHER-OF-SIX Djenabou Diakité no longer has to worry about snakes in the children’s bedroom at night.

“Now you sometimes see them in the daytime but not at night because the light deters them,” said Djenabou, whose husband and children have all moved away from their home in the village of Garalo in search of work.

Now she looks after her sick neighbour’s grandchildren and survives on what money her own children can send back home.

The light comes from an electricity generator powered by oil extracted from the seed of the jatropha bush, a nitrogen-fixing shrub that is helping villagers in remote regions of the vast sub-Saharan country of Mali in West Africa face up to the problems caused by climate change.

Biofuels and solar panels are among the principal tools being employed by aid organisations like Christian Aid and Mali-Folkecenter as the rains dry up and the Sahara desert expands southwards.

They power pumps bringing clean water from deep underground, irrigate crops, or provide electricity for hospitals and health centres and to help villagers to earn a living.

It’s a cruel irony that those most affected by a changing climate are the poorest countries of the world who have done least to pollute the atmosphere with greenhouse gases.

But they are sending a stark message to the developed world.

African countries have agreed to speak with one voice at Copenhagen.

African Union Commission chairman Jean Ping said they want industrialised countries to cut carbon emissions dramatically and accept the principle that the polluter pays with $150bn to help Africa adapt to climate change. It may seem a lot, but it compares with many times that amount – some $24 trillion – used to bale out banks and financial institutions.

Mr Ping said Africa does not have the means to confront the consequences of environmental degradation caused by climate change in an already fragile ecosystem.

“For a continent with only 3.5% of greenhouse gas emissions, Africa is paradoxically the most vulnerable, experiencing the most serious consequences of climate change – drought, floods and soil erosion,” he said. In Mali, the rainy season used to start in May and last to the end of October. Before 1973 the average rainfall was 600mm – around 24.5in – a year.

It’s now 450mm – about one-third less – and the downpours are heavier and cause serious erosion.

And now the rains don’t start until July, and sometimes return unexpectedly late in the year to ruin crops ripening in the sun.

Mali-Folkecenter director Ibrahim Togola will be among the 20,000 delegates at Copenhagen. He said: “If the summit fails it may lead to political collapse and decline in many countries and nobody will want to be leader any more.

“If it fails there will be political consequences for all the leaders going to Copenhagen.

“They know the risk they are taking.

“The world will be different after Copenhagen, whatever happens. Awareness of climate change has grown much faster over the past 12 months and for the first time the civil society of Africa has been mobilised.

“The region already has one of the biggest migration patterns to Europe and it’s growing at an alarming rate.

“It’s already unusual to hear of a boat disappearing in the Mediterranean without hearing there were Malian people on board.

“And the people going to Europe are young people – the strong and dynamic ones. When they know there’s no hope here, the rate of migration will double or even treble.”

Mr Togola said investing in Africa now would ensure that rich countries would not have to invest in other ways.

The economy of Mali is based on agriculture. Eighty per cent of people are directly involved in farming, growing crops to feed themselves and producing a cash crop – probably cotton – to provide a bit extra.

Mr Togola said Mali, despite being the seventh poorest country in the world, has a relatively stable democracy.

But he said: “If the economy collapses further you won’t see that. There will be a civil war.”

Malians are doing their best, with help from aid charities, to steer a path out of their problems using renewable energy solutions.

Mali-Folkecenter – MFC – works in partnership with Christian Aid in the village of Tabakoro, one of three that are now solar-powered through a joint MFC-Christian Aid project.

Photovoltaic panels provide lighting for the school, the health centre and the main village roads and public spaces, and power pumps and taps that draw sweet water from a deep well.

The villagers are also taught to construct buildings without using wood in order to preserve trees.

The project has reduced water related diseases and been a special help to women, who can now collect water from a nearby tap instead of walking long distances.

They can also use the school after dark, when their daytime chores are over, to learn basic money-handling skills that increase their earning power at market.

The health centre has a fridge for storing vaccine and snake bite serum, cutting out the need for a 6km walk to the nearest town for vaccine and ice. Kandiatu Koné, a 36-year-old mother of six, said water in the old wells turned red during the dry season and children, in particular, fell ill after drinking it.

She said: “Even in normal times you had to wake up early in the morning to go looking for water.

“The quality is much better now.”

At the school, a concrete building with a tin roof furnished with small desks of the kind that were common in Britain until the 1950s or 1960s, Faeoudiam Fatou Doumbea said she started lessons this year at the age of 50.

“I began to come here because I wanted to be able to manage the crops and store cereal and grain, to be able to count what I put in and take out,” she said.

“After I finish my work and after dinner I come here six nights a week and stay until I get sleepy. It’s very hard to come here after work, but without the light it wouldn’t even be possible.” She said the women learn the alphabet and numbers, and she appreciates the lessons so much she often takes a book home to try to teach herself.

She said: “I know it will open my mind and I will be able to raise my living standards. I have two daughters and two sons who all attend school and they love seeing me come here at night to learn things.

“It’s good for the men too because they can see the difference in an increase in the family income.

“Women who come here are much more able to sort out their money and to evaluate situations. Before this women had to call for a man to come and count their money and write it down. Now they can do it themselves.”

She said everybody enjoys the classes, which have brought them closer together. The women have agreed that if someone misses a class they have to pay a small fine.

Electricity, this time from biofuel generators, has also transformed life in the village of Garalo, which is reached after a bumpy two-hour journey from the nearest town of Bougouni along a deeply-rutted red dirt track. There the village mayor, Souliman Sanaké, talks of the Jatropha biofuel project that began in September 2007.

“This is just the beginning. It’s the same as in the city – electricity brings awareness and here it has helped people to work in local production, like shea butter, cashew nuts and other things. We now have fridges to store food and vaccine.”

A few strategically placed street lights have improved security and school lessons can now go on longer. This year every child over nine years old passed their exams.

Jatropha, the plant that provides the biofuel for the electricity generator, is a small tree that grows to around 5m and lives for 50 years. It comes into full production after five years. The seed is pressed to produce oil and the “cake” left over is a good organic fertiliser.

Pierre Dembelé is in charge of climate change at MFC. He went to Cardiff in the Cut the Carbon march of June/July 2007.

He said: “There is a Jatropha producers’ cooperative and we’ve set up a private company to buy the seed and run the power plant.”

The Mali government meets 50% of the cost of a project that costs around £580,000, involves around 450 farmers and provides no fewer than 30 villages in the commune of Garalo. Jatropha fixes nitrogen in the soil and is inter-cropped with food crops like beans, maize and peanuts and also cotton.

And as it thrives on poor land and improves fertility, there’s no conflict between growing for food or fuel.

Alain Dembelé, the Malian government representative in Garalo knows how the climate is changing because he keeps rainfall records.

He said: “Quantity is important but it’s when it rains and how it’s distributed that makes a difference. Rainfall is unpredictable now. There was not enough rain in June and July so people were making sacrifices. Later the rain came.”

Mr Dembelé, who has worked in six of the eight regions of Mali said he has noticed that grass now grows less vigorously and four varieties have completely disappeared in the bush.

But he said electricity makes a huge difference to people’s lives.

“When I was young I thought electricity was for wealthy people.

“But now it’s increasingly a factor in development,” he said.

“Tomorrow is market day and my wife will earn 1500 CFA francs – less than £2 – by selling ice in the market. It might not be important in terms of your pound but here it’s a lot of money.”

Mamadou Kané, aged 66, who has three wives and 23 children, 13 boys and 10 girls, is President of the Garalo Electricity Cooperative.

He said he used to use a small generator to pump water in his compound and spent a lot of money on diesel and other running costs.

He said: “Now I don’t pump water before the generator comes on at 4pm, I don’t have to buy spare parts to fix the generator and or diesel so it’s much easier for me.”

The biofuel plants send clean water to 68 taps in the Garalo commune, and two communities of Bobo people who have migrated from the north each have a tap.

Mali-Folkecenter director Ibrahim Togola says Christian Aid does not dictate what Malians should do to tackle their problems but supports realistic solutions that they want to adopt.

“It’s clear that climate change is affecting us all. People are also affected in the rich countries, but here we are more vulnerable,” he said.

Dec 10 2009 by Steve Dube, Western Mail

Soros Joins Top Names in African Deal

What unites once the world’s most powerful foreign secretary, once the world’s most powerful hedge fund manager and a scion of perhaps once the world’s most powerful banking dynasty? The answer, surprisingly, is a London-based private equity manager investing in Africa, writes James Mawson, editor of Private Equity News.

Helios Investment Partners, an independent firm set up five years ago by two former executives from TPG Capital, a large and very influential buyout group, has pulled off the feat of bringing George Soros, Madeleine Albright and Jacob Rothschild into the same deal to open up mobile phones to the other half of the African population without telecommunication access.

As co-investors in Helios Towers Africa, the four have committed an initial $350m in equity to buy mobile phone masts in the continent outside of Nigeria and boost telecoms penetration rates beyond 45%.

Temitope Lawani, a co-founder of Helios, said the firm had previously invested with Soros Strategic Partners, the private equity operation of the hedge fund manager who effectively forced the devaluation of sterling more than a decade earlier, in Africa. Soros has been a successful backer of US mobile phone towers, having bought Sprint’s 3,000 masts a few years before, and knows the sector well.

Albright and Rothschild are big investors in emerging markets: Madeline through raising $350m for the Albright Capital Markets fund in 2007, while Lord Rothschild has family investments in emerging markets and runs RIT Capital Partners, a listed investment company.

Lawani said as a result of their expertise, Helios had approached them to join as co-investors in Helios Towers Africa. [Read the full story, by James Mawson, here.]

An Adventurous Fund Manager Takes Aim at Developing World

Richard Laing must count as one of the world's more adventurous fund managers. His portfolio spans banking in Rwanda and clothing in El Salvador, with an assortment of energy, environmental and manufacturing projects along the way.

His aim isn't simply to turn a profit, but to bring long-term benefits to those areas of the developing world where he puts his cash, helping them toward economic growth and a better future. He is firmly embedded in the school of thought that says that simply giving cash aid to poor countries isn't the answer to their problems. Investing in businesses that will create jobs and pay taxes is his preferred route to lift these countries out of poverty.

Mr. Laing spreads his net widely by running a fund of funds, investing in funds run by dozens of different fund managers. "We're now involved in around 130 funds with 65 fund managers," he says. But his mode of operation is far more active than the normal fund of funds. If there is an area in which his team particularly wants to get involved, it will encourage proposals for new funds for which it would be the primary backer.

His employer is the British Government, for Mr. Laing's role is a modern reincarnation of what was Colonial Britain. His business now rejoices in the anodyne name of CDC Group PLC but was once the Commonwealth Development Corporation.

Despite its government backing, it is a commercial operation that doesn't drain taxpayers' funds.

That didn't prevent the cries of righteous indignation from political campaigners when it was learned that Mr. Laing's 2007 salary had reached almost £1 million. The shrieks implied he was profiting at the expense of those his business purported to help rather than being rewarded for generating successful returns that would then be ploughed back into more investments.

Those voices weren't heard last year, when Mr. Laing's earnings took a hit, as did the value of CDC's portfolio. By the year end, net assets had fallen 13% to £2.3 billion and the value of the portfolio was down 22%. The current year hasn't been easier, as economic turmoil has continued to envelop the world. But CDC's performance over the longer term has been above average: in the five years to the end of 2008, it produced an average annual return of 18%.

Mr. Laing has been chief executive of the business since 2004, having joined as finance director. He had previously been at De La Rue, the bank-note printer, a position that had also brought him a directorship at Camelot, in which De La Rue is an investor.

Camelot runs the U.K.'s national lottery, and some might see a link between lotteries and investing in some of the businesses that CDC backs. But Mr. Laing, a Cambridge-educated accountant, believes that, with careful homework, the risks can be modified.

"We spend a lot of time on doing due diligence of the fund and the team running it, and we do stay in dialogue and monitor the projects," he says. Occasionally, when things appear to be going wrong, CDC will step in and get more directly involved. That has happened a couple of times during the past year, he says, adding that is only two out of 130 funds that have needed extra attention.

The organization's original remit saw it investing in Africa, Asia and Latin America, the idea being that it would go where capital was scarce. That could hardly be said to be the case now in places such as China and Brazil, so CDC's brief has been more tightly defined, and it is concentrating its efforts on sub-Saharan Africa and South Asia.

Infrastructure is high on the investment-priority list with a $500 million commitment to infrastructure funds, but, at the other end of the scale, CDC has committed $5 million to a fund backing small and midsize businesses in Sierra Leone.

"Our managers tend to like businesses that aren't export led," Mr. Laing says. "In sub-Saharan Africa there are consumers who, for the first time in their lives, have a little bit of money to spend and who want products and services." Backing businesses catering to them is an important part of the CDC philosophy.

Emerging markets aren't generally easy places in which to do business. Corruption can be rife and Mr. Laing doesn't deny it. But he insists those he backs manage to avoid getting embroiled in it. "Entrepreneurs will now say that they will not play that game," he says.

It is the scale of bureaucracy that can be the biggest problem, he says, citing the case of a Bangladeshi business that needed to import spares for its power business. "They needed to get 57 different signatures in order to bring them in," he says with a sigh.

Given such difficulties, perhaps it isn't surprising he says the biggest issue for CDC is "finding good fund managers."

Some of the most successful managers it now backs originated in CDC. Actis, spun off in 2004, is styled as a private-equity fund specializing in emerging markets. Since it gained independence, it has raised $7.6 billion, a chunk of it from CDC. Now, however, the Actis model of investing in larger projects is drawing ample backing from the private sector, and CDC is lessening its involvement with the firm, which currently accounts for around 45% of its portfolio.

'Where we can be most efficient is in focusing on those areas where there is a shortage of capital," Mr. Laing says. He sees plenty of potential investments to be made and finds it frustrating that, because of the difficulties that have hit markets recently, his existing investments aren't throwing off the level of return that would enable him to take full advantage of opportunities. "We're cash restrained when there are bargains to be had," he explains.

But if that is one of the frustrations of his job, he sees plenty of upside too. "I love it," he says with a smile. He spent three years working in Brazil in his previous job and determined he wanted to work in emerging markets. Now he spends a great deal of time travelling around them and is convinced that he and CDC are benefitting countries in which they put their cash.

He is a realist and recently wrote in the group's Development Report that: "Of course, with such a large portfolio of companies which operate in some difficult environments, things don't always go according to plan, and we do have instances of business failure, governance frailty and environmental concern. However, we work hard with our fund managers so that these are identified and rectified as soon as practicable."

Emerging markets are packed with challenges but also with potential, and Mr. Laing is determinedly pursuing the latter.

Write to Patience Wheatcroft at patience.wheatcroft@wsj.com

Chinese Firms Propose $50 Billion Oil Buy in Nigeria

NEW DELHI -- Chinese companies have proposed investing $50 billion to buy 6 billion barrels of oil reserves in Nigeria, the African nation's presidential adviser on energy said Tuesday.

"Chinese companies have made proposals to buy reserves in Nigeria. Specifically, their application is to acquire 6 billion barrels of oil reserves, which we are currently discussing," Emmanuel Egbogah told reporters on the sidelines of an industry conference.

Mr. Egbogah declined to name the Chinese companies looking to buy the reserves.

In September the Nigerian government said it was in advanced talks with China's CNOOC Ltd. over signing deals on several onshore oil blocks as the state-run company looks to expand its position in Nigeria by securing drilling rights going unused by Western energy firms.

Nigeria will within three weeks approve major reforms to the oil and gas sector when it passes its Petroleum Industry Bill, which covers both upstream and downstream operations. It includes changes to existing production-sharing agreements between the government and international oil companies.

China, Africa's third-largest trading partner behind the European Union and the U.S., has plans to invest in Africa to secure its energy supplies.

"They are prepared to spend as much as $50 billion," Mr. Egbogah said, when asked on the likely investment by Chinese companies.

He didn't give any timeline for the discussions to conclude.

Mr. Egbogah also said Nigeria plans to adopt some alternative route to meet the funding requirements of Nigeria's oil and gas industry.

"The international oil companies in the existing joint venture arrangements have consistently complained that the government's budgetary allocations for cash call purposes have often and chronically fallen short of requirements over the years," Mr. Egbogah said.

Western oil companies work through joint ventures and production-sharing agreements with Nigerian National Petroleum Corp.

He said the industry is facing a cumulative funding shortfall of $6 billion.

"We are going to some alternative funding mechanism to close the shortfall," he said. "This doesn't include government bonds but includes other type of borrowings. That is what we call alternative funding."

— Spencer Swartz in London contributed to this article.

Write to Rakesh Sharma at rakesh.sharma@dowjones.com

Africa popular as long-term comm. prop. destination

By Andrew Macdonald

LONDON, Dec 11 (Reuters) - Commercial property experts are taking an increasingly positive view of Africa as a long-term investment destination, as it and other developing markets benefit from globalisation, a conference was told on Friday.

Three of four panellists featured in the annual Thomson Reuters (TRI.TO: Quote, Profile, Research) Global Property Outlook said they picked Africa as a investment destination for a pot of about $100 million over a 20-year period, or longer.

Bill Kistler, president of Urban Land Institute EMEA, said globalisation would help Africa eventually sort out many of the economic and demographic challenges it faces.

"There's great opportunity there. I'm not quite sure, however, in which sector, within real estate, to invest in," Kistler told the 150-strong audience at the conference.

"You'd have to be very unlucky to pick a reasonably stable country (in Africa) and miss (on making a return) over a 20-year horizon," he said.

Jana Sehnalova, director and portfolio manager at brokerage Forum Securities, said she would also pick Africa as an investment destination from a range of other emerging markets.

"I think you would go through a few heart attacks (by investing in Africa), but at the end you would probably have some sort of profit," she said.

Nick Axford, head of EMEA research at property consultant CB Richard Ellis (CBG.N: Quote, Profile, Research), said while he would invest in direct real estate in certain emerging markets, Africa was not at the top of his list.

"I absolutely buy the longer term story about Africa, but I don't think it's going to happen over the next 20 years, so I would be looking at India ... in terms of a combination of stability with growth," Axford said. (Editing by Andrew Macdonald and David Holmes)

Arabs push for their share in scramble for Africa’s business

In Summary

  • Firms say they will take advantage of huge projects being set up on continent

Arab companies plan to expand their consultancy business in Africa with a view to reaping from the current accelerated implementation of huge multi-billion infrastructural projects.

Consultancy firms from the Arab world who have been meeting their counterparts in Africa in Nairobi, resolved late Thursday to take advantage of the current infrastructural business in the African region a year after the emergence of the global financial crisis.

The companies were meeting under the umbrella of Arab Bank for Economic Development in Africa (Badea).

They said their interest is to participate in technology transfer and assist in enabling African governments explore as well as exploit huge opportunities in various sectors of the economy, for instance, the energy, tourism, environment and social sectors.

Form federation

During the three-day forum, the professionals set up Federation of African and Arab Consultants to assist in exploiting the huge business potential in the region.

“We have decided to form the Federation of African and Arab Consulting Firms to push our cause. We want to take advantage of the infrastructural development in the two regions. Infrastructure was one of the sectors that was not hit by the global economic recession,” Mr Moncef Ziani, the newly elected Federation of African and Arab Consultants president told journalists.

He will be assisted by six vice-presidents from other Africa countries. Mr Ziani said the forum resolved to have Nairobi act as the temporary office pending resolution by the executive committee.

Mr Ziani, the general manager of CID Engineering and Development Consultants in Morocco, said Badea would take a leading role in funding agriculture and infrastructural developments in Africa.

He said the Arab bank was willing to invest in projects that would enable African countries gain self-sufficiency in food through increased agricultural investments.

Mr Ziani said the bank and the federation should act as an institution to anchor cooperation between African and Arab states in joint infrastructure projects.

The forum, whose aim is to encourage greater cooperation between Arab and African consulting firms, is a continuation of the first and second fora, which were held in Cairo (June 2007) and Tunis (November 2008), with the aim of reaching an effective partnership between African and Arab consulting firms.

Current enthusiasm

“We are particularly interested in enhancing our consultancy business following the current enthusiasm by African governments to improve the infrastructure sector with the view of taming the effects of the global credit crunch crisis,” said Mr Ziani.

He said the Arab countries partnering with their counterparts in Africa will necessitate production of quality services and more so at a time like this when the world is facing serious challenges key among them global warming and economic recession.

“Our key mission is to mobilise synergy in consultancy and exploit the much endowed potential in Africa and its environs,” he added.

Ministry of Finance permanent secretary, Joseph Kinyua, who closed the two-day meeting, commended the formation of the new consultancy institution saying it would assist in the process of developing projects, contracting, supervising engineering works and undertaking technology and financial feasibility studies.

“The successful implementation of projects entirely depends on the professionalism and competence of the consulting firms,” he said.

Joint venture

Mr Kinyua also called for more Arab investments in Kenya and hailed the Arab Bank for its investments in the country.

He said that the new partnership will facilitate transfer of knowledge and technology among the Afro-Arab consultancy firms and earn the development experiences for the benefit of African and Arab experts.

The PS said the joint venture will create a leeway for local consultancy firms to seek business from the Arab region and thus gain the much needed modern standards.

In Kenya, Mr Kinyua said, consultancy business accounts for about 1 per cent of the Gross Domestic Product, adding that the low uptake is further necessitated by a lack of competent capacity to undertake the issues at hand.

Over 40 consulting firms from over 30 Arab and African countries attended the two-day forum that was held within the framework of Badea’s objectives. They are to develop and strengthen Afro-Arab co-operation through actively involving the economic and financial stakeholders in fostering co-operation between both regions. (Suna)


PRIVATE INVESTOR TO BUILD RUNWAY FOR ZIMBABWE DIAMOND FIELD

HARARE, Nov 25 (NNN-ZIMONLINE) — A private investor is looking to construct a runway at the controversial Marange diamond field in eastern Zimbabwe to ensure secure movement of the gemstones to a handling facility being built in Harare.

A top official of Mbada Investments, which was chosen together with another private firm to partner state-owned Zimbabwe Mining Development Corporation (ZMDC) in exploiting the Marange claim, said the runway was part of efforts to halt any illicit movement or smuggling of diamonds from the Marange or Chiadzwa field.

?Diamonds from this area will be flown to Harare in a more secure condition,? Mbada chairman Robert Mhlanga told government taskforce that visited Marange at the weekend.

?We are also constructing a diamond handling facility at the Harare International airport and time permitting we will be inviting you to see the facility in Harare,? Mbada said.

A team from the Kimberley Process (KP), the world diamond industry watchdog, that visited Zimbabwe at the end of last June condemned rampant smuggling of diamonds among other illegal activities as well as gross human rights abuses at Maranage.

But a KP meeting in Namibia about three weeks ago decided against banning Zimbabwe diamonds from the world market and instead agreed to give Harare more time to review operations at Marange and improve security arrangements to comply with the organisation?s standards. — NNN-ZimOnline

ZIMBABWE SIGNS FOUR MORE DEALS WITH CHINA

HARARE, Dec 9 (NNN-NEW ZIANA) — Zimbabwe and China have signed four agreements which will see massive investments in the country in the areas of construction and mining.

Zimbabwean officials from the Ministries of Transport and Infrastructure Development and Mines and Mining Development signed the agreements with representatives of the Sino-Zimbabwe Development Company and the China International Fund here Monday.

Areas covered in the four agreements include construction of the Harare International
Airport runway and taxiway, Harare-Chitungwiza railway line as well as electrification and installation of signalling equipment on the Harare-Gweru railway line.

The Sino-Zimbabwe Development Company will construct the airport runway and taxiway at Harare International Airport as well as install lighting systems at an estimated cost of 40 million USD.

The Chinese company will also construct the 25-km Harare-Chitungwiza railway which has been on the drawing board for many years and which is touted as the panacea to transport woes of the residents in the dormitory town.

It will also re-electrify and install signalling equipment on the Harare-Gweru railway line.
Theft of electricity cables on the railway stretch over the past few years resulted in the National Railways of Zimbabwe failing to operate more than 15 electric locomotives that it used to carry heavy loads between the two cities.

Meanwhile, China International Fund will invest at least 90 million USD in working capital and partner the Zimbabwean government to exploit gold at the Conemara Mine as well as set up a centre for purchasing diamonds at the Marange Diamond fields in Manicaland.

The Chinese are expected to deposit at least 10 million USD within the next three days, for use in carrying out due diligence activities, with the rest to be invested as work on the ground progresses.

Mines and Mining Development Ministry Permanent Secretary Thankful Musukutwa signed the agreements with China International Fund,while Transport and Infrastructure Development Ministry Acting Permanent Secretary Nelson Kudenga signed the pact with with the Sino-Zimbabwe Development Company.

Speaking after the signing ceremony, the Chief Secretary to the President and Cabinet, Dr Misheck Sibanda, said the deals were an indication of the deepening economic co-operation between the two countries.

“It is a moment of true co-operation on a win-win basis,” said Dr Sibanda, who commended the Chinese for showing confidence in Zimbabwe by taking the risk to invest in the economy which was still grappling with the crippling effects of sanctions that some Western countries imposed.

He called on the countries that imposed the sanctions to lift them immediately and allow Zimbabwe’s inclusive government to implement programmes which would take the country out of the economic meltdown it went through over the past decade.

“We continue to call on those that imposed illegal sanctions to express their sincerity to join the bandwagon by immediately lifting them,? he said.

Dr Sibanda assured investors that the Zimbabwe government would continue to make the environment conducive by addressing pertinent issues they might have as it stood ready to strengthen relationships with countries in the East and the wider international community.

He noted that the Chinese had expressed interest in investing in other areas and negotiations were underway, with agreements expected soon.

Speaking at the same occasion, a representative of the China International Fund said the agreements were based on the spirit of South-South Co-operation and mutual benefit.
“It is also a demonstration of the friendship between China and the people of Zimbabwe,” he added. “We believe we can co-operate in more fields and more projects.”

Following imposition of sanctions by Western countries, the Zimbabwe government adopted a deliberate policy to establish new markets in the East dubbed the Look East Policy.

The policy has started to bear fruit with the country receiving investments and financial assistance in various economic sectors including agriculture, transport and Information Communication Technology from countries such as China, India, Iran and Malaysia.

A fortnight ago the government signed five other agreements worth 8.0 billion USD with another Chinese company for gold production. — NNN-NEW ZIANA

Africa builds as Beijing scrambles to invest

By David Pilling

Published: December 10 2009 02:00 | Last updated: December 10 2009 02:00

A few years ago, Lukas Lundin, a mining executive, rode his motorbike 8,000 miles from Cairo to Cape Town. His journey, which took just five weeks, meandered through 10 countries, including Sudan, Ethiopia, Malawi, Zambia and Botswana. He was amazed to discover that 85 per cent of the roads he travelled were tarred and of high quality. Many had been built by Chinese companies.

That was 2005. Since then, China's interest in Africa has intensified. In November 2006, Beijing hosted a lavish Sino-African summit at which it promised more than 40 of the continent's leaders a new era of co-operation. Giant elephants and giraffes appeared on hoardings across the capital to mark the occasion.

Beijing has offered more than long-necked symbolism. In 2006 alone, it signed trade deals with African countries worth $60bn. Investments, which often include a resources-for-infrastructure element, have poured in thick and fast. China's stock of foreign direct investment has shot well past $120bn (€81bn, £74bn). In 2006, Angola temporarily overtook Saudi Arabia as China's main supplier of oil, and Africa now accounts for nearly 30 per cent of China's oil imports.

Nor is China's interest limited to oil and minerals. In 2007, Industrial and Commercial Bank of China, the biggest bank in the world by deposits, paid $5.6bn for a fifth of South Africa's Standard Bank. Only last month, at yet another Sino-African jamboree, this one in Egypt, Beijing pledged $10bn of new low-cost loans to Africa. It also promised to eliminate tariffs on 60 per cent of exports and to forgive the debt of several countries. Trade between Africa and China has already risen spectacularly: last year, it jumped 45 per cent to $107bn, a tenfold increase over 2000.

Beijing's engagement with Africa has caused much hand-wringing. Western donors decry Beijing's supposedly scruples-free approach to investing in countries such as Sudan. In some African countries, too, China's growing shadow has provoked anger. Nigerian radicals likened an attempt by the China National Offshore Oil Corporation (CNOOC) to secure 6bn barrels of oil to being attacked by locusts.

Such objections are overdone. They are often disingenuous. China is no philanthropist, but its rise may still represent Africa's best hope of escaping poverty. In the eight years to 2007, before the financial crisis, African countries were growing, on average, by more than 4 per cent a year, far higher than previously. That was thanks partly to better economic management, debt relief and increased capital flows (some from China), but also to the higher commodity prices driven by Chinese demand. Dambisa Moyo, the Zambian economist who riled western donors with her book Dead Aid , says: "China's African role is wider, more sophisticated and more businesslike than any other country's at any time in the postwar period."

Much of the criticism of China's influence rings hollow. As Chinese - and Japanese - officials point out, the west's track record is less than exemplary. European contact with Africa can best be summed up as decades of naked rapaciousness followed by a spectacularly unsuccessful attempt to make amends. During the cold war western governments supported dictators and kleptomaniacs across the continent, from President Mobutu Sese Seko of what was then Zaire to Uganda's murderous British-trained Idi Amin. More recently, in the name of conditionality, benefactors have rammed frequently disastrous economic fads down the throats of hapless recipients. With donors like that, who needs enemies?

China's pragmatism may produce better results. First, an emphasis on infrastructure means that, even if deals are corroded by corruption, at least the recipient country ends up with a road, port or hospital. (OK, or perhaps a soccer stadium.) Much Asian growth, including that of China itself, was predicated on infrastructure. Officials in Tokyo often contrast Japan's own business-oriented approach to south-east Asia - where countries such as Thailand, Malaysia and Indonesia benefited greatly from Japanese trade and investment - with dubious development strategies pushed by the west in Africa.

Second, China's approach is built on trade. Ms Moyo argues that genuine business opportunity is more likely to catalyse development than government-to-government aid that is prone to being siphoned off. Robert Zoellick, president of the World Bank, told the FT there was Chinese interest in helping to create low-cost manufacturing bases in Africa.

Third, and crucially, China is not alone in seeking opportunities on the continent. As well as the west, India, Brazil and Russia are also vying for business. That ought to give resource-rich African countries the ability to haggle for better terms, though of course there is no guarantee that increased funds will not simply line bigger pockets.

It would be wrong to be wide-eyed about China's investments. Some Chinese businesses are rightly condemned for lax safety standards and for shunning African labour. Critics are doubtless right that Chinese money has helped prop up unscrupulous regimes in Khartoum and Harare. Yet China is hardly alone in dealing with thieves and villains. Whatever its side-effects, a scramble to invest in Africa has got to be better than the European precedent; a scramble to carve it up.

david.pilling@ft.com

Copyright The Financial Times Limited 2009.