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David Stafford
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Student of markets, enjoys following their course.
My book:
Around the World in Several Pieces
  • Around Africa in Several Pieces Part 3; Angola, the Democratic Republic of the Congo, and Namibia 0 comments
    Jun 9, 2010 7:10 PM

     Hello Ladies and Gents, fine citizens of Seeking Alpha, today we have another look into…dum dum dummm Africa.  For Today’s countries lets look at the southern reaches of that fabled land, into none other than the economies of the Democratic Republic of the Congo, Namibia and Angola.

     
    In keeping with tradition lets break down the GDP growth figures first.  Lets start with Angola.  Our friends in Angola have been seeing GDP growth figures like +1.5% for 2004,  +11.7% for 2005, +19.9% for 2006, + 15.0% for 2007, +16.7% for 2008,  +13.2% for 2009, and a projected -.2% for 2010.  If you’re looking at all but the last of these numbers and thinking to yourself ‘holy canolis this is fantastic’ the data is with you to back you up.  For throughout the vast majority of this period of time discussed, Angola was at the top 2 or 4 countries in Africa in so far as GDP growth rates are concerned.
     
    With Namibia as our focus we’re look at GDP growth rates of +3.3% for 2004, +4.8% for 2005, +3.2% for 2006, +4.6% for 2007, +3.6% for 2008, +2.9% for 2009, and a projected +.7% growth rate for 2010.  Perhaps the only similarity between these two GDP growth rate figures is that both bombed out in the projection for 2010.  Clearly there are some stark differences in the as opposed to Angola, Namibia’s growth rate…was ranked in the mid-140’s for much of this time period.  It’s never too late to turn things around though so who knows what the future may hold for this sun beaten nation.
     
    For the DR Congo, we’re looking at figures somewhere in between the two sets of data described above.  We have a +6.5& growth rate for 2004, a +7.5% growth rate for 2005, a +7.1% growth rate for 2006, a +6.4% growth rate for 2007, a +7.0% growth rate for 2008, a + 5.9% growth rate for 2009, and a +3.0 % growth rate for 2010.  Not too shabby but its definitely not another Angola, here’s were looking at a ranking in the 31-60 rang for most of this period, and its GDP figures stayed stable through to this year, something to be said for that I guess.
     
    For the breakdown of these figures we have the following. DR Congo’s GDP composition is 55% agriculture, 11% industrial, and 34% service related.  Perhaps this lack of industry is what insulated the countries GDP through 2010, perhaps this also presents us with a potential sector ripe for investment, surely we will see in the next few decades.
     
    For Namibia, we have a really unique GDP breakdown for Africa in general.  We have a mix whereby only 9.2% of the countries GDP is agriculture related, with industry composing 34.8% of the countries GDP, and services rounding it out with a 56% figure.  This could lend its self for more developed investing, however it may similarly be wise to not that the economies GDP is somewhat stable as well, thus perhaps one wouldn’t see traditional Emerging Market growth figures, but one could see an interesting investing environment for the right sort of investor, for those long term stability seekers in Emerging Markets, who knows, these jabberwockies may be out there somewhere.
     
    The much awaited breakdown, that of Angola‘s economy, clocks in with a GDP composition of 9.6% agriculture, 65.8% industry, and 24.6% services.  One may notice that this is a somewhat flipped version of Namibia’s economy, and it seems like a good mix, since the countries GDP is booming like Alaska’s during the Klondike gold rush days.
     
    In taking a more microcosmic focus we’ll notice that Angola’s economy is really tied to that of the US’s and to the price of oil.  The US government has supposedly spent 4 billion dollars in so far as the countries energy sector is concerned, and unsurprisingly the US imports roughly 7% of its oil from Angola.  Some say that Angola is like a pre-gulf war Kuwait, in that it’s a petro-client of the US per se.  To buttress this Oil heavy economy we have the mining of diamonds and iron to round out the lineup, making Angola a formidable economic powerhouse for the region, not much different in a sense from its raw-resource rich neighbor to the south, South Africa.
     
    In the DR of Congo’s Economy one sees a nation whose economy is many ways founded on the less developed sort of economic model that one see historically tied to Africa.  The DR of Congo is a diamond in the rough, its flowing rivers and streams generate enough hydro-power that it can export said power to neighboring countries.  Its vast forest, which cover 60% of it’s land mass are the target of big and small scale lumber operations the world over.  However, in order to facilitate the further exploitation of said resource the government is planning on giving foreigners a little bit of help with the tax code, a potential source of future investment perhaps.  The world will always need wood too, and since this country has some oceanic ports, one won’t have any trouble shipping said trees and or paper products out of the country.  Thus with a developing forestry trade, one may also see improvements in manufacturing jobs and an improvement of the standard of living for the country as a whole.  Thus, where Namibia has diamonds, steel and oil, The Democratic Republic of the Congo has forests and running waters, fueling their future development.
     
    As was deduced from the GDP growth rate and sector breakdown mentioned earlier, Namibia is a unique sort of emerging market.  Namibia has ocean going ports within its territories, and it has a relatively well developed air travel sector as well.  Namibia’s real wealth however lies under its sun beaten soils.  Deep within the ground in Namibia there lie reserves of uranium, diamonds, lead, zinc, tungsten, and silver.  Thus Namibia has many resources to fill one’s own or other’s coffers with.  Thus Namibia is somewhat of a more mature market one could say as far as the region goes, and like Angola, with its reliance on subterranean resources, perhaps one could also like Namibia to its resource rich neighbor to the south, South Africa.
     
    May your investments reap you whirlwinds of profits and may your life be merry.
     
    All the best,
    David Stafford


    Disclosure: None
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