UNITED States businesses generally have avoided most sub-Saharan African nations as prospects for commerce and investment. Yet with tentative democratic reforms stirring the continent, Africa is increasingly being seen as an opportunity zone.
The African Development Bank, headquartered in Abidjan, Ivory Coast, reports that from 1988 to 1990 US companies tripled the volume of business done through the bank.
Last November, 38 US firms participated in what is billed as the largest US trade mission to Africa ever. Sponsored by the US Agency for International Development and the Overseas Private Investment Corporation (OPIC), its size reflects a sense that many African countries are seeing "real economic growth and real opportunities for growth," says Kevin Callwood, OPIC's vice president for investment development.
With the close of the cold war, African governments can no longer play one superpower against another in search of economic assistance.
"There is a clear affirmation in Africa that foreign aid is not going to grow. Financing is going to have to come from private sources. To do that, one has to improve the business climate," says Mima Nedelcovych, the US executive director of the African Development Bank.
"The democratization of the countries in Africa has opened them up to compete for employment, jobs, and wealth creation," says Daniel Montano of Montano Securities, an investment banking firm in Orange, Calif., which is involved in Africa, Eastern Europe, and the republics of the former Soviet Union.
UNLIKE the former Warsaw Pact countries, African states - even those with the most radical forms of socialism - kept strong links with the West. Commercial relations continued, often along old colonial lines. Legal systems and accounting practices likewise reflected colonial influences. Many African leaders, while pursuing socialism, understood the workings of the free market.
Although there is "a mass of individuals going into Eastern Europe, we felt the returns there might not be as favorable as in Africa," notes Clarence Haynes, with the investment banking firm of Pryor, McClendon, Counts & Co. in Washington, D.C.
But because the Western image of Africa is one of heavy-handed bureaucracy, impoverishment, and corruption, Mr. Haynes and Mr. Montano are in a minority. "We're dealing with a situation where structural reforms really do take time to build the momentum for change," says Paul Ballard of the World Bank's Africa technical unit. Governments are selling state-owned industries - even profitable ones - as in Ghana, where the government-run Coca-Cola bottling plant is being privatized.
A market within Africa is also developing. Trade between countries is increasing for farm products and manufactured goods. Experts on African economies see huge potential should South Africa - the continent's most developed economy - become a multiracial democracy no longer ostracized by its neighbors.
"South Africa is the catalyst," says OPIC's Mr. Callwood. When "there is a free flow of goods to and from South Africa to the rest of the continent, we will see ... phenomenal" economic growth.
Yet other experts say growth will not be secure until African nations can raise capital without relying on outside help. Ghana is already moving in that direction. Montano is proposing a link between Ghana's young capital market and the US market. Pryor, McClendon, Counts & Co. is working with Ghanaian partners to create local money-market and corporate-bond funds.
"Any process of change requires changes in habits," Mr. Ballard says. "This is a longer-term process."