Without political stability, some minimal standard of property rights and commercial law enforcement, social cohesion and decent infrastructure as a catalyst, I wouldn’t expect much economic activity beyond natural resource extraction.
Ivory Coast was the economic star of West Africa in the 80s, but today is a civil-war-torn mess.

These people need clean water and electricity but instead they get “microloans” so that they can sell digital photos to each other. This scheme is so silly that it must have been invented in a humanities department of an Ivy League university.

The fact that Tanzania’s population is growing despite an allegedly massive AIDS epidemic makes me (and many before me) suspect that statistics are being deliberately exaggerated in order to obtain grants. Back in 2003 The Spectator (UK) had an interesting article on this:

“A year or so back, modellers produced estimates that portrayed South African universities as crucibles of rampant HIV infection, with one in four undergraduates doomed to die within ten years. Prevalence shifted according to racial composition and region, with Kwazulu-Natal institutions worst affected and Rand Afrikaans University (still 70 per cent white) coming in at 9.5 per cent. Real-life tests on a random sample of 1,188 RAU students rendered a startlingly different conclusion: on-campus prevalence was 1.1 per cent, barely a ninth of the modelled figure. ‘Doubt is cast on present estimates,’ said the RAU report, ‘and further research is strongly advocated.’

A similar anomaly emerged when South Africa’s major banks ran HIV tests on 29,000 staff earlier this year. A modelling exercise put HIV prevalence as high as 12 per cent; real-life tests produced a figure closer to 3 per cent. Elsewhere, actuaries are scratching their heads over a puzzling lack of interest in programs set up by medical-insurance companies to handle an anticipated flood of middle-class HIV cases. Old Mutual, the insurance giant, estimates that as many as 570,000 people are eligible, but only 22,500 have thus far signed up. “

Africa has a good chance, but investors need to remember Zimbabwe as a cautionary tale. Even 5 years ago there were favorable articles about doing busines s there; now of course it will be a miracle if Mugabe can be removed without a civil war.

The August issue of Business 2.0 magazine is on globalization, and includes an articule on Village Enterprise Fund, which makes $100 microloans in Africa — $50 for startup, $50 after six months if they meet their goals. 75 percent of the startups last at least four years. One example is a five-partner startup that sells bike parts from a small shop off the side of the road.

Thomas Friedman had a similar microloan example in his book “the World is Flat,” about a startup that leases a digital camera, printer and mobile solar power station and goes around selling picture services to villagers.

The focus in Africa seems to be on microloans, probably because the education isn’t there nor is the infrastructure of courts, reliable power, credit records, and telecom. Of course I’d bet the continent harbors at least one Costa Rica, the exception to the rule. This same Business 2.0 notes that, unlike the rest of South America Costa Rica abolished its military decades ago, is diplomatically neutral, has a social security system and accompany personal credit bureaus and decent education system, including mandatory English. Intel and Procter & Gamble are among the companies with operations there and the country has 24,500 call center jobs. Astoundingly, even Nicaragua now is attracting call centers.