Middle East and Africa bear untold riches for exporters

If you think that Asia's industrial revolution will
drive a "commodity supercycle" for another
decade or two, think again.
Africa is likely to see a profound change in
its fortunes and the Middle East will
become ever richer.

By Ambrose Evans-Pritchard
 
With the confluence of "peak oil", scarce metals,
and constrained food, the best endowed of
these regions will see a steady climb
in their terms of trade.

The OECD says Africa has the potential
to become an agricultural superbloc, if it can
unlock the wealth of the savannahs
by allowing farmers to use their land
as collateral for credit.

Africa has seen its greatest resurgence
since colonial independence, growing at a 6pc rate
in the five years to 2008.

Foreign direct investment (FDI)
tripled to $30.6bn (£19.4bn).

Free-market reforms and a shift from
top-down development doctrines have begun
to unleash pent-up energies.

Rwanda, Egypt, and Liberia, are among
the World Bank's top 10 reformers,
Solar electricity and mobile telephones
have helped rural areas travel
from isolation into the global economy.

The International Monetary Fund (IMF) says
growth will dip to 1.7pc this year, rebounding
to 4pc in 2010.

This will accelerate as the global economy
returns to health, doubtless setting off
a further "scramble for Africa", as China
and the US vie for strategic resources.

China's CNOOC upped the ante last month,
offering to buy a sixth
of Nigeria's oil reserves for up to $50bn.

For British exporters the prize is South Africa,
where Pretoria is spending $90bn
on a fiscal package of infrastructure
renewal over five years.

The money is going on ports, railways,
and the electricity grid, with a chunk
for wind power and sustainable housing,
two British niches.

The health service is being overhauled.
Just 7m of the 50m population has insurance.

The state is planning a network
of "remote clinics" that require
sophisticated diagnostic and imaging systems.

The Gulf states of Saudi Arabia, Qatar,
the Emirates, and Kuwait together
had oil revenues of $575bn last year,
and dreams to match.

They squandered the oil boom
of the1970s overseas.

This time they are investing at home.

The gas-rich sheikdom of Qatar – the world's
wealthiest country per capita, with an output
target of 5.5m barrels per day of oil
equivalent within four years (half of
Saudi Arabia's output) – is turning itself
into a desert Scandinavia, with a cluster
of university campuses.

It is spending $130bn by 2014
to create a hub for biotechnology,
solar power, chemicals, fertilisers, plastics.

It is an open door for Britain, allied
by intimate ties to the ruling Al-Thani family.

Qatar is Britain's energy lifeline, able
to supply third of our gas through
liquefied national gas (LNG).

The relationship works both ways.
British experts run the financial district.
The top judge is our
former Chief Justice, Lord Woolf.

The Gulf suffered when crude prices
fell from $147 last year to under $40
over the winter.

A string of builders have run into trouble.
Dubai's palm island developer Nakheel
faces a debt crisis.

Local property prices have fallen 50pc.

The ruling Maktoum family has been
bailed-out by Abu Dhabi.

This nasty jolt has forced Gulf states
to slow their $1 trillion blitz on investment projects
and gleaming tower blocs along the Arabian coast.

But if oil stabilises at around $70 a barrel
and rises steadily over coming years,
many of these will still go ahead.

The Saudis are building the $27bn King Abdullah
Economic City, a metropolis the size
of Washington, with its own Square Mile
of banking towers, one of four new cities
in the Kingdom.

Abu Dhabi is building the world's first "car-free,
zero waste, self-sustaining city" at Masdar,
for $22bn. Kuwait plans a $130bn Silk City,
with a tower twice the height of any in existence.

British companies already know their way around
these countries, close strategic allies.

The effect of US anti-terror policies after
9/11 has strengthened the bond with London.

"The Gulf states are pro-British but you can't go
there expecting an overnight success,"
said Paul Taylor from UK Trade and Investment.

"You have to meet people, keep
building relationships.
That's the way business is done
in the Middle East, but the rewards can be great."

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J-L K
Sent from Kigali, Rwanda