Low interest rates in developed world driving money to Africa

London, Sunday

Could it be that rock bottom interest rates in the developed world are driving money into Africa?

Corruption, bureaucracy and uncertainties over debt restructuring all remain as barriers to investment in Africa, but overall the climate is improving, at least according to emerging market specialists who gathered recently at Thomson Reuters’ London headquarters for panel discussions on African investment. There has been a lack of opportunity and willingness for international investors to get back into Africa, after many pulled out as a result of the global financial crisis.

But that is starting to change as minimal interest rates in developed countries once more propel investors to higher-yielding, growing economies. Michael Hugman, emerging markets strategist at Standard Bank, told the conference: The crisis for Africa should be a relatively short-term deviation. People are finally waking up to the fact that Organisation for Economic Co-operation and Development countries are offering little over one per cent.

Debut Eurobond

Postponed international bonds may once more be on the road, with Central Bank Governor Njuguna Ndung’u promising the conference Kenya will launch a planned debut Eurobond next year. A loan to Angola was likely to be approved this, delegates from the International Monetary Fund said, adding they were "cautiously optimistic" on Africa’s growth outlook.

However, Africa is unlikely to return to the heady days of 2007, when, according to David Cowan, Africa strategist at Citi, "you could just make up a country in Africa, assign it a mythical commodity export, and investors would come flocking." - —Reuters