September

These windows of opportunity have not gone unnoticed by among others many companies from the Southern African economic powerhouse, the Republic of South Africa. They have already started to make inroads into the rest of Central, Eastern and Northern African sections which were previously considered as investment hinterlands. In this respect, companies such as MTN in telecommunications, MNET in entertainment and Eskom in the energy sector have become synonymous with the African development process. 

Director of Ceremony,

I will now briefly touch on the main sectors in which I believe opportunities abound for investment on the African continent with equally or more high returns to make any investors dream come true. These sectors are telecommunications, transport infrastructure, energy and banking among others.

Telecommunications

According to a report from the International Telecommunications Union by the end of 2001 about 56 percent of African countries allowed competition in mobile cellular networks, up from 7 percent in 1995, and only 6 countries were lacking a cellular network in 2001 compared with 28 in 1995. Also, mobile network operators increase to 100 in Africa from only 33 in 1995.   This dramatic change in the telephone infrastructure was possible due to the liberalization of the telephone market and many privatizations which took place in the industry. Through these admission modes a new vibrant market was created which bypassed the fixed line operators usually protected through economic nationalism. Interestingly the investors in the African telecommunications have been rather pan African initiatives such as Orascom Telecom, MTN and MSI and not large multinational companies or even African governments.

Energy

In the electricity sector, investments in developing countries had fallen to half of their peak of US$42 billion in 1997 and were focused outside Africa according to a 2002 report from the Business Map Foundation. But unlike in the telecoms sector there are not many home-grown electricity companies with sufficient capital and skills to fill the gap left by declining foreign investment interests. This scenario is proof that many opportunities are available yet untapped in the energy sector. Despite the scarcity of reliable statistics the general view is that in many cases electricity provision has not kept up with population growth or has

actually deteriorated due to a lack of investment.

As a response to this perceived market gap, a group of countries with the backing from South Africa’s Eskom created the Southern African Power Pool to attract foreign investment in the energy sector through an enlarged energy market. The Southern African Power Pool is to link up South Africa, Mozambique, Zimbabwe, Zambia, Namibia, Botswana, the Democratic Republic of Congo, Swaziland, Tanzania, Lesotho and Malawi. It started trading in 2001 and hopes to attract foreign and local investment.

Transport

Another sector of immense potential for foreign investment is the transport sector in which at least an annual investment of US$18 billion is required into African infrastructure to attain the type of growth which could lift large numbers of people out of poverty. However, investments are reported to be currently less than a third of the amount needed. The dilapidation of large areas of transport infrastructure is described as putting a brake on economic growth, hindering competitiveness and therefore curtailing regional and global trade opportunities. However, from an investment point of view this state of affairs offers ample opportunities for risk defying investors interested in upgrading to 21st century technology such infrastructure. Such investment will enable economically viable cargo mobility in Africa and competitive access of products to international markets. Policy makers in the SADC region having realized the need for investment to rehabilitate transport infrastructure are demonstrating a strong commitment to do business through private-public partnerships (PPS).

Banking

Finally, in terms of the banking sector it is reported that the commercial banking sector in Sub-Saharan Africa is consistently more profitable than elsewhere in the world with an adjusted Return on Investment (ROE) of 25.6 percent in 1998 and 20.4 percent in 1999. New technology investments such as automated teller machines, electronic banking, credit and debit cards and the execution of payments through electronic funds transfer at the point of sale are largely needed in many countries on the African continent.

It is therefore clear that in spite of the many challenges presented to service sector investments on the African continent, in many instances the expected returns do not match the risks but simply exceed the risk factors by far. Hence, it is not farfetched to conclude that given the changes introduced in many African countries with regard to peace and stability, multiparty democracy and the putting in place of strong macroeconomic variables such as low inflation rates and steady competitive currencies, many of those who have been investing in the traditional markets of developed countries with their equally low returns need to start focusing on the African continent.

I THANK YOU