Foreign Investors Recognize Allure of Sub-Saharan Africa

Inefficient state-owned companies, especially phone companies, are being privatized. Many countries have adopted policies to shrink their deficits and control inflation. And in Kenya, Uganda and Nigeria, banking reforms have spurred massive growth and investment in that sector, which is now able to offer mortgages, car loans and other services once unavailable to middle-income Africans.

James Shikwati, a Kenyan economist, said there are several factors driving governments to embrace the private sector: The Cold War is over, and capitalism won. Globalization is a reality. And with investors from India and oil-rich Middle Eastern countries looking for places to put their money, African governments do not want to be left out.

"We've moved from a stage where, at independence, there was a feeling that the government must deliver everything," Shikwati said. "Now, governments are quietly realizing that private enterprise can deliver more, and they're giving more space."

Since it was colonized, sub-Saharan Africa has often suffered from a striking dichotomy of perception, seen as the very heart of darkness on one hand and a treasure trove of natural resources and fast money on the other. Ruthless exploiters have always had their hands on Congo's rubber or Sierra Leone's diamonds, extracting resources with little benefit to local people and enjoying the profits overseas.

Shikwati and others cautiously suggest that the current situation is different. Enormous gaps between rich and poor persist in most sub-Saharan African countries, but there has been a slow trickle-down effect from the growing private sector, as jobs have been created in the cellphone industry, for instance, or tourism or banking.

Maggie Kigozi, executive director of the Uganda Investment Authority, attributes about 63,000 new jobs created in that country this year to growth in the private sector. Uganda has cut extreme poverty in half over the past decade -- down to 30 percent of the population living on less than $1 a day -- a fact that Kigozi also chalks up to private sector activity.

"We owe our success to that," she said. "Not to the World Bank, and not to nongovernmental organizations," she said, referring to aid groups.

In Uganda's capital, Kampala, Doddy's firm is helping finance the rapid expansion of a microfinance company called Blue, which makes small loans to government employees. The interest rates are high by U.S. standards -- around 20 percent -- and the money is paying for undertakings from home repairs to college educations.

But perhaps the most obvious value of the investment is in the dozen or so employees who now have jobs that pay about $300 a month, a decent starting income in Kampala. With commissions, some make as much as $2,000 a month.

"The companies we are invested in employ around 28,000 people, and 99.9 percent of those are Africans," Doddy said. "There is an important role for the World Bank and NGOs to play, but for the economy, the driver is going to be the private sector. That's what's worked in the rest of the world, and it's what's going to work in Africa."