Saturday, June 30, 2007

African Tigers Re-Born

Some scientists believe that there were tigers in Africa a million years ago, but some species died out. The more recent hopes that the continent would generate tiger economies have been equally blighted.

Think of Ghana. When the former Gold Coast gained independence in 1957, its prospects were bright. The new country was rich in cocoa and gold and its population was relatively well-educated. But a long series of coups and persistent corruption dashed those hopes. Ghana is still resource-rich, but it relies on foreign aid for 11% of gross domestic product, and 60% of the population still toils away in subsistence agriculture.

An oil discovery and some changed thinking may be giving Ghana another chance. As John Kufuor, Ghana's president, put it, 'We're going to really zoom, accelerate.'

Oil alone certainly won't work miracles, despite a local newspaper's enthusiastic headline: 'Thank God, Oil at Last, Thank God.' In Nigeria, Angola and Venezuela, huge oil wealth has been disastrous, thwarting the nonoil economy and fertilizing corruption. Fortunately for Ghana, the country's oil revenues are expected to be more moderate -- a little less than the current flow of foreign aid.

A few brave global investors claim that some African countries, including Ghana, are finally learning the lessons of African failure and Asian tiger success. What makes economies successful isn't gifts from foreigners or royalties from oil producers, but bourgeois virtues: education, infrastructure, honest government, middle-class savings, a widespread work ethic, small families and so forth.

The newfound optimism may be a triumph of hope over experience, or a misreading of the effects of the current boom in resource prices. But it does look like a smaller portion of the windfall revenue is being wasted than in the past. That goes along with growing middle classes and more economically responsible governments.

Right now, the only tigers in Africa are a few specimens imported from China. But Mr. Kufuor may be right in his hopes for an indigenous species: 'You come back in five years, and you'll see that Ghana truly is the African tiger.'

Source: StreetInsider

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