It's the governance, stupid!

20 December 2007 By Martin Hutchinson

Africa was a surprise investment hotspot in 2007, thanks to high commodity prices and global liquidity. It could do well again in 2008, the global credit crunch allowing. Chinese investment is the main hope; continuing bad government the main fear.

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African economic growth is expected to average 6.2% in 2007, compared to 5.5% in 2006.

Nigeria's stock market is up 62% in 2007; of other African markets Mauritius is up 50%, Botswana up 35%, Ghana up 30%, South Africa up 13%, Namibia up 9% and Kenya down 7%. The markets of Kenya, Mauritius, Nigeria and Tunisia are included in Morgan Stanley Capital International's Frontier Market Index; South Africa is in MSCI's Emerging Markets Free Index.

On Transparency International's 2007 Corruption Perceptions Index, Botswana at #38, South Africa #43, Mauritius #53, Ghana #69 and Senegal #71 are the African countries above India and China, which are equal #72.

Trade between Africa and China has grown at 40% per annum since 2001; in 2006 bilateral trade totalled $50bn. Chinese investment in Africa totalled $12bn at the end of 2006; ICBC in October announced a $5.4bn purchase of 20% of Standard Bank.

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African economic growth is expected to average 6.2% in 2007, compared to 5.5% in 2006.

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