The prospects in Africa are endless. With the current global economic crisis, Africa appears to take the role of the "Bailor of last resort"! It is common knowledge that many the stimulus policies instituted by several western governments are still wanting-specifically in Europe where they are still yet to prove their worth. In the USA, significant results have been recorded especially in the auto and financial sectors. But the benefits are still yet to simmer through to the general populace which is most affected.
China is reeling from its unrealistic/unsustainable economic growth rates and the ever tightening noose on many of its exports to both Europe and the USA. While Japan is pondering the next move after the ignominious economic halt it currently suffers due to unprecedented deficit that preceded the dreadful tsunami that devastated the greater north of the country.
The statusquo positions Africa as the global bread winner. The continent is currently witnessing an influx of MNCs, and various Global companies with strong western and far Eastern roots, such as Halliburton, Tullow, Sinopec, even unusual retailers such as Walmart...and the list goes on!!
Most of the corporate investments are mainly skewed towards minerals and raw material investments especially oil. Oil companies are investing billions of dollars in exploratory blocks especially on West African Shores, and along the African rift valley fault lines in addition to the traditional oil blocks in the north African deserts.
China alone receives an estimated one-third of its oil imports from Africa (ChinaBriefing), which holds about 9 to10 percent of the world's oil reserves. Whereas the Middle East produces the the biggest share of global oil supplies, its production yields heavy, sour crude that costs more to refine, while Africa produces primarily light, sweet crude oil that’s cheap and easy to refine into gasoline or diesel.
The new investment pattern suggests that as economic crisis enters fiver pitch, both Western governments and their home corporations have decided to look beyond their BRICK emerging market "partners-in-business", and now targeting selective African frontier countries for resources and markets in what they believe to be an "easier" solution to economic crises (for governments) that also promises higher yields while managing risk exposure (for corporations).
African regimes on their part are not necessarily taking this "invasion" lightly. They undoubtedly but cautiously welcome the investments from the West and far East; but also stressing the need for partnerships to foster development! Gone are the times when most African countries entirely depended on aid and debt to sustain their economies. They have increasingly learnt to leverage their economic sustenance by using more of their natural resources and less of debt or aid.
The results also suggest that Africa has to some extent benefited from Foreign Direct Investment (FDI) through more human productivity, improved management skills, infrastructural investments, increased exports, increased training, improved skills and health. and Africa is more connected to global markets. Foreign capital has also indirectly made the integration of countries into global economic networks in some African regions even more relevant, such as the the revitalization of the old EAC, with new members - Rwanda, Burundi, and eventually Southern Sudan.
The down side of FDI is Africa's small share of this investment pie which is at about 5% (center for global investment cgdev.org). Additionally, Investment has been strongly concentrated. In the mostly three countries (South Africa, Angola, and Nigeria) which
accounted for 55% of the total and the bottom 24 countries for less
than 5% according to cgdev.org. Additionally, there has been a long-standing concentration in the exploration and extraction sectors, particularly petroleum and minerals. Africa has also been choked by the dumping of substandard/ low grade and toxic products mainly from China, a feat that explains the increasingly tight conditions on Chinese products in both Europe and USA .
Of course there are also political hiccups and corruption tendencies that are in the way of Africa's progression towards achieving its hard earned benefits as a global bread winner. Some of these are unfortunately promoted by the foreign investors looking for preferential favors on major investment contracts (Another long topic in itself!). Overall, I think Africa has a pivotal role to play in solving the global economic crisis to its own betterment and that of other economies.