Which way for Malawi, Africa?

from The Malawi Daily Times

BY CLIFTON KAWANGA

Although Africa has a lot of resources that can transform the continent economically, it consistently tumbles to the bottom of any gauge that measures economic activity. However, that song has been sung for a long time and it is time to rewrite the verses. CLIFTON KAWANGA attended a Sub Sahara Africa Investor Conference in London recently, he writes:

At the Sub Sahara Africa Conference in London recently, Miles Morland recreated and painted the image of Africa using two of the many themes of William Shakespeare; appearance and reality.

“I see an Africa that can sustain itself using the available resources but the picture that is painted is not the reality,” he said adding that Africa is presented as hopeless but the truth is that it has a lot of investment opportunities.

It was not surprising that the power of Morland’s speech sent the conference room into an unimaginable silence as the message filtered through.

The discussions revolved around the reality that is Africa; an Africa that has investment potential regardless of the challenges that are often times blown out of proportion.

“There is no justification for investors to ignore Africa because the reality is that there is no continent without challenges,” said Dr Ngozi Okunjo Ikweala, chair of Renaissance Group’s African Advisory Boards and Managing Director (Designate) of the World Bank.

She said since the question that people ask is “who is to unlock the investment potential?” Africans have the responsibility to expose the investment opportunities that exist.

“People should discard the stereotypical view of the continent and judge Africa by what is happening now.

“Those who take risks will benefit from the opportunities. We are no longer talking of an Africa with diseases, poverty and corruption,” she said.

Many people now agree that the time of action has arisen and Africa should lift itself from the dungeon of poverty through investment.

“It is widely argued that Africa needs Western investment and that multinational corporations are not the cause of Africa’s problems but the solution. Well, the fact that Africa needs foreign investment cannot be denied,” writes Regina-Jere-Malanda in this month’s New African.

Renaissance Group Chief Executive Officer Stephen Jennings said Sub Saharan Africa is now travelling its own path of accelerating and lasting economic transition.

“Each Sub Saharan African country is obviously unique in important and defining ways. Every country will add a national flavour to its resurgence, yet the basic economic recipe they share is tried, tested and true. It centres on the creation of an environment that enables market forces to unleash each country’s human and physical resources and much more efficiently allocate capital,” he said.

Jennings said as important as these global trends were, what was going on in the region and in each country was even more significant in ensuring Sub Sahara Africa’s economic sustainability.

He cited improved terms of trade, stronger macro-economic policies, economic liberalisation, dramatic debt reduction, a critically important decline in regional conflicts and a marked increase in political stability as fuelling this phenomenal economic growth.

National Bank of Malawi Chief Executive Officer George Patridge, who attended the London conference, stressed that the country is one of the Sub Sahara African countries with a healthy investment environment.

“Malawi has an infant and bullish capital market, an interest rate regime and inflation that are on a downward trend, stable government with a political will for economic development and exciting opportunities for strategic alliances or consolidation of small institutions into a formidable institution for regional markets,” he said.

Jennings said although some countries in Africa were experiencing political instability, they were still potential investment destinations.

For instance, last year’s GDP growth in Sudan was 10 percent despite the Darfur crisis while Malawi – which is politically stable – has registered a 7.9 percent GDP growth this year.

Jennings said conflicts should not deter the investors because there are critical factors that are at the core of Sub Saharan Africa’s economic prowess.

He said one of them is the importance of functioning equity markets. Prior to 1989, there were only five stock markets in Sub Saharan Africa. Today 16 countries have fully operational bourses. These exchanges have seen a dramatic growth in market capitalisation – rising from US$14.5 billion in 2002 to nearly a US$100 billion today, a compound annual growth rate of nearly 50 percent.

For instance, Malawi is one of the countries with a commendable growth in market capitalisation. Malawi Stock Exchange was established in 1996 and currently it has 13 counters listed in the sectors of banking, manufacturing and agro-processing, leisure and hospitality, real estate and conglomerate, among others.

According Malawi Stock Exchange report for the week ended November 23, the market recorded trading activity in all counters, except Blantrye Hotels Limited and Old Mutual Plc. A total of 56,289,516 shares were transacted during the week at a total consideration of K351,560,417.20 (US$2,514,265.32) in 72 deals.

Jennings said another factor of economic prowess in Africa is the emergence of the new generation of more pragmatic political leaders that has been ushered in under constitutional rule and civilian regimes.

“They [leaders] are increasingly concerned about making things work, primarily because they are now more accountable to the voting public and because there are stronger constituencies pushing for further reform,” he said.

Although some leaders have become more accountable, others still feel not a lot has been done to assist poor nations.
“As history teaches us, it was because of the massive resource transfers in the aftermath of World War II that Western Europe recovered and was set on its development path. A similar intervention helped put a number of Asian countries onto their own development trajectory. The question we should ask is why is there an absence of the same resolve to assist poor nations today?” querried Thabo Mbeki at the 62nd session of the UN General Assembly in September this year.

But with all the efforts by Russia based Renaissance Group, this should be the ‘rebirth’ of Africa where investment is the main key to open the door of massive development in Africa.

The group began operations in Sub Saharan Africa in 2006. It is creating the region’s leading financial services platform, establishing pan-regional investment banking, stock broking, research and asset management operations.