Wednesday, 14 May 2014 08:12 AM
Anyone who invested in China 30 years ago and held on through the bumps is very wealthy today. Sadly, we can't turn back the calendar, but we can look for the next China. I think it will be Africa.
No single African nation is as large as China (yet), but their combined economic potential may be even greater. The continent's 1.1 billion people could rise from subsistence farming to modern industry much faster than the Chinese did, too. They have several key advantages.
Unlike China, where the Beijing-based communist party imposes its plans, Africa has political diversity. There is no single point of control in Africa. While corrupt presidents-for-life still hold power in many nations, they won't hold it much longer. Their people know what is possible, and they are slowly installing governments that will deliver it.
Aren't radical Muslim groups a threat to African stability? Yes, indeed they are. The Boko Haram kidnappings in Nigeria are only one example. Last year's Westgate Mall shooting in Nairobi, Kenya, is another.
On the other hand, Boko Haram is failing in its primary goal, which is to stop Nigeria from educating young girls. Likewise, the fact that Nairobi has a mall for terrorists to target is a sign of progress.
Africa also doesn't have to face the demographic disruption China inflicted on itself with the one-child policy. China is getting progressively older, while Africa is producing millions of future workers.
Young Africans, like young Americans or Europeans, are growing up with mobile technology all around them. The continent now has roughly a billion mobile phone users. Most of them are what we would consider old-fashioned phones with actual buttons, but Africans squeeze amazing feats from their phones. Kenya's M-Pesa mobile payment system is more secure than your credit card was at Target last Christmas.
The final reason Africa will surpass China is what I call the "leapfrog" effect. Africa is going to zoom straight through entire stages of development in the next decade. Huge areas never had phone wires, nor will they in the future, because cell towers made wires unnecessary.
The same will happen with electricity. Africa will never have a "grid" like ours because it will never need one. Solar cells and windmills are a far more cost-effective way to electrify tropical villages.
Think about the trillions of dollars the United States spent on coalmines and utility infrastructure, and the trillions more spent to clean up the messes. Africa is going to skip all that. There will still be plenty of mining, but driven by export demand, not domestic necessity.
Even China thinks Africa has more potential than China does. Companies from Beijing, Shanghai and Hong Kong are racing to invest in African infrastructure projects. Just last week, Chinese premier Li Keqiang visited Ethiopia, Nigeria, Angola and Kenya to negotiate trade and infrastructure deals.
Africa has all the ingredients to be the next China except one: capital. Chinese investors see the opportunity. For now, few Americans see it, but they will.
Tomorrow's China miracle will be Africa. The most successful investors will be those who get there ahead of the crowd.
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