STAFF NEWS & ANALYSIS
The African Investment Meme Continues
By Staff News & Analysis - March 11, 2013

Ghana … Golden Opportunities Africa: Investing in the Cradle of Civilization … This year could prove an interesting one for Africa's west coastal country, Ghana. Presidential and parliamentary elections are slated to be held by year-end, the results of which are almost sure to impact the shape of the country's future. President John Atta Mills has stated in the press that he will "take all necessary constitutional steps to ensure the conduct of free, fair and transparent elections." I certainly hope he's successful in his efforts, because after a recent investment opportunity exploration trip to Ghana, I'm encouraged by the economy's 14% growth in 2011 1 (that's faster than China!), and would be pleased to see evidence of more positive momentum. – Franklin Templeton blog

Dominant Social Theme: Africa is the next China.

Free-Market Analysis: We've written a number of articles on Africa now, explaining the way "investing" works on a macro level – and why Africa is the next "chosen one." This article is just one more example of why we're reporting on it.

Just as we were among the very first to detect the subsiding of the central bank meme, the rise-by-proxy of Islam in Northern Africa and the at least partial deflation of the "Chinese Miracle," so we believe we have unearthed another significant meme with Africa. See here, too, for our latest: Does Surprising Guardian Article Provide More Clues About Pan-African Investing?

If we are correct, the coming African miracle will continue to be promoted in the media and people will become intimately familiar with the promise of African countries they probably still couldn't find on a map.

Who is familiar with Ghana after all … Franklin Templeton? Certainly, Templeton researchers can travel to Africa to spin a nice story. But whether the reporting is accurate is another question. But – to be fair – just as importantly we have to ask whether the "reporting" even matters. Here's more from the article, explaining the riches that Ghana offers:

Ghana has abundant natural resources, including timber, oil, silver and manganese, but perhaps most important are cocoa and gold, two prized commodities for which Ghana is a key producer. What is generally considered the most important gold mining company in the country is listed on a number of stock exchanges around the world. In the Western world, chocolate is ubiquitous, showing up in everything from instant hot chocolate powder to artisan truffles. In India, gold glitters just about everywhere and the wedding season is fully festooned with it. The global consumer market for these commodities is evident. As important as cocoa is to Ghana's export business, the country also grows rice, cassava, peanuts, corn and bananas 2 in significant quantities, so its agricultural assets are reasonably well diversified.

Ghana's stock exchange benefits from its proximity to Nigeria and the Ivory Coast, which simplifies cooperation between the exchanges and helps improve liquidity. The exchange is not new; it was founded 21 years ago. From what I observed, it has about 20 to 30 brokers trading both stocks and bonds via a fully electronic trading clearance and settlement system which enables them to trade from their offices and homes.

Of course, not all that glitters is gold, and Ghana faces its own set of challenges. In the banking sector, the rate of non-performing loans (NPLs) is quite high, though it is expected to decline in a more stable macroeconomic environment. 3 It's certainly something to keep an eye on. From what I understand, not many Ghanians have a bank account, so I think the prospects for growth are good in the banking sector.

Okay, the bottom of this excerpt explains that 30 brokers run Ghana's stock exchange and that most Ghanians don't have a bank account. This doesn't exactly sound like a massive financial power but no matter. Twenty years ago the current Ghanian situation would have been presented as backwardness. Today, it is presented as an opportunity.

It is not just Ghana, of course. Other parts of Africa are doubtless going to be presented in much the same way – South Africa, Niger, Nigeria, the Congo … and Kenya. The very unindustrialized nature of these economies will be presented as a positive. More room to grow! In fact, if we are correct about this, the whole of Africa is due to be unified and presented in much the same manner as China has been.

Before this latest episode of directed history is over, people will become familiar with the idea of Africa as a US bond buyer of last resort and much will be made of the power and innovation of African finance and industry.

That this will happen, if we are correct, is merely a testimony to the incredible reshaping capabilities of central banking. There will be vast money flows that will change the texture of the pan-African economy. In fact, we may even see the creation of an African central bank …

Oops! Say, it's already happened …

That's right. We went in search about a possible central bank and found the following on Wikipedia:

The African Central Bank (ACB) is one of the three financial institutions of the African Union. Over time, it will take over responsibilities of the African Monetary Fund.

The creation of the ACB, will be completed by 2028, was first agreed upon in the 1991 Abuja Treaty. The 1999 Sirte Declaration called for a speeding up of this process with creation by 2020.[1]

When it is fully implemented via Pan-African Parliament legislation, the ACB will be the sole issuer of the African Single Currency, will become the banker of the African Government, will be the banker to Africa's private and public banking institutions, will regulate and supervise the African banking industry, and will set the official interest and exchange rates; in conjunction with the African Government's administration.

Read these three little paragraphs carefully, as they only re-confirm our paradigm. Sure, it is a "conspiratorial" one – that Money Power itself controls the process of macro-finance globally and that the world's economy in its vastness is not just the product of random chance.

First Japan swapped consumer items – and increased industry – in return for buying US debt. Then China and now … we think we see signs that Africa is being prepared for the same promotion.

And despite the vastness of these efforts, it IS a promotion. It is an artificial expansion, funded by media positioning of an "African opportunity" and the determination of the powers-that-be to keep at least part of the dollar-reserve system functioning adequately.

Did you know there was an African central bank – or that its various functionalities are being speeded up? Did you know that it was supposed to be the sole issuer of a soon-to-come African single currency? Of course, the Wikipedia report is not by itself a certain signifier but it fits the pattern. Something is being prepared, it seems to us.

Is Africa really set to explode like China? And if so, is it worth making an "African play" or are too many people now aware of these vast manipulations, thus rendering them less and less successful? This is the conundrum of the 21st century … whether elite managed Money Power is going to be as effective in the 21st century as the 20th.

After Thoughts

What do you think?

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