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08 Apr 2008 10:00
Africa will be well-placed to weather a global economic downturn if it uses high oil and commodities prices to diversify its economies, one of the continent’s most successful businessmen said in an interview.
Nigerian tycoon Aliko Dangote—one of the world’s richest men with business interests in oil and gas, food processing, mining and telecoms—said the world’s poorest continent could benefit while developed nations suffered an economic slowdown.
“The credit crunch works better rather than worse for Africa in terms of investment,” Dangote said while on a visit to Sierra Leone late on Sunday.
“It means there is a lot of money that needs to be invested somewhere and the best place is ... developing countries like Africa,” he said, pointing to growth rates in some African nations more than double those of their Western counterparts.
Tortuous bureaucracy, rampant graft, crumbling infrastructure and a lack of political stability have long proved a major turn-off to all but the hardiest foreign investors in many parts of sub-Saharan Africa.
But in recent years the region has enjoyed its best period of sustained growth since independence, much of it driven by demand for raw materials from rapidly industrialising nations like China and India.
The International Monetary Fund (IMF) said last October it expected sub-Saharan Africa’s economy to grow 6,8% this year.
Its latest global forecast puts world growth at just 4,1% due to the weak outlook in the United States and Europe.
“African countries have a lot of resources like iron ore, manganese, oil.
He added that some states were simultaneously benefiting from the effects of debt relief.
But some economists worry that “Dutch disease” could afflict commodity-rich African nations, a phenomenon in which high revenues from natural resources lead to a strengthening of the currency, a rise in imports and a fall in productivity.
Such a situation could put countries in dire economic straits in the event of a sharp drop in oil or commodities prices, leaving them import-dependent but saddled with falling revenues and a lack of local production.
Dangote—whose business empire in Nigeria has led to his fortune being rated at $3,3-billion by Forbes—has built up diversified holdings in a country whose wealth mostly derives from its position as the world’s eighth-biggest oil exporter.
“What we are trying to do is to ... broaden the base of our revenues, those who are investing in banking, who are doing several other things, so that by the time oil starts going down ... oil will no longer constitute the major factor in our national economy,” he said.
A close ally of former Nigerian president Olusegun Obasanjo, his group of companies dominates several key markets in Africa’s second-biggest economy including sugar, flour and cement.
Two of his companies—Dangote Sugar Refinery and Dangote Flour Mills—have been floated on Nigeria’s stock exchange in massively over-subscribed public offerings in the past year and his group has $12-billion of projects under way, including expanding cement factories across the continent.
He is a major player in the fuel import business and snapped up a telecoms licence and mining concessions in a rush of privatisations in Obasanjo’s last few months in power. Forbes ranks him as the world’s 334th richest man.—Reuters
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