KANSTEINER SEES OPPORTUNITY IN LAST GREAT EMERGING MARKET
Africa attracts a tiny percentage of the worlds capital flows, and most of the capital that finds its way to the continent resides in South Africa. For wellinformed investors who are tough-minded and patient, however, the rewards from investing in Africa can be substantial, says Walter Kansteiner, principal of the Snowcroft Group and, until late 2003, assistant US secretary for African Affairs.
Africa is the worlds last great emerging market and will be a business force in the future, Kansteiner says. He and other Africa boosters addressed a conference at Citigroup in New York on increasing capital flows to Africa, organized by the Corporate Council on Africa (CCA), an organization of about 200 US companies with investments on the continent.
Capital is smart, said Frank Kennedy, chairman of the CCA financing task force, which includes representatives from financial institutions interested in promoting increased foreign investment in Africa. He cited a list of African oil and gas, pipeline, aluminum smelter and mobile cellular network projects that have succeeded in attracting significant investment.
However, Sika Awoonor, vice president of communications for Atlanta, Georgia-based GoodWorks International, which is developing the Cabinda port project in Angola, had a different point of view. My experience has been that capital is a coward, she said.
Nevertheless, some African companies that find themselves shunned by analysts in developed countries can gain a broader research following by issuing American depositary receipts, bankers say (see ADRs, page 11).
Kansteiner, who advised the buy side on the $1.3 billion partial privatization of Telkom South Africa, says investors need to learn to mitigate risks, and insurance in force from the Overseas Private Investment Corporation is growing rapidly. Meanwhile, he adds, African regulators are aggressively enforcing good corporate governance rules. Theyre on the right path, Kansteiner says.