Africa’s resources get global attention
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KAI RYSSDAL: It’s going to be a busy couple of days in Cape Town, South Africa. There’s a U.S.-Africa Business Summit there today. The U.S. is still the largest investor in the continent, although China’s gaining fast. Tomorrow, Fed Chairman Ben Bernanke and Henry Paulson from the Treasury Department, arrive for a meeting of what’s known as the G20. Finance leaders from industrialized and some of the major emerging economies: Countries like China, India and Brazil.
Gretchen Wilson reports from Johannesburg, Africa’s getting more notice thanks to a strain on global resources.
GRETCHEN WILSON: Though Africa’s generally known as a poor continent, it’s rich in natural resources: from oil and natural gas, to copper, gold and platinum. And African countries are rapidly selling off these commodities to the rest of the world — at high prices.
JEFF GABLE: Generally in Africa we’re finding that commodity producing countries are certainly benefiting unambiguously from the current environment.
That’s Jeff Gable, head of research at ABSA Capital in Johannesburg. He says it looks like commodity prices will be robust for a long time.
GABLE: This is the strongest economic growth that we’ve seen in a very long time. And what’s happening is we’re running out of stuff. So as demand increases, demand for energy, demand for raw commodities increases, the supply response has not been as rapid. Markets are much tighter now than they used to be, and you see that in just about everything.
And that’s what delegates to the G20 Summit are anxious to discuss. Because commodity price changes affect importers and exporters differently. For example, Angola’s seen massive growth thanks to its oil exports. Just next door, Zambia exports copper, and Botswana exports diamonds. But these economies still struggle to keep pace with soaring oil prices. Economist Adrian Saville of Cannon Asset Management.
ADRIAN SAVILLE: They might be exporting other commodities, but in order to export these other commodities, they need to import very expensive oil.
It’s the Catch-22 that the world’s finance ministers and central bank governors will discuss for the first time at this weekend’s summit.
In Johannesburg, I’m Gretchen Wilson for Marketplace.
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