Johannesburg - Fancy a bet on the best-performing currency
of 2012?
If last year is anything to go by it may lie somewhere in
frontier Africa, scene of a headlong resource scramble by mining companies that
threatens to overwhelm small, undeveloped economies with a tsunami of cash.
The Tanzanian shilling could be an outside shot - the east
African country is an up-and-coming gold producer and promising source of
natural gas.
But a stronger contender could well be the leone of Sierre
Leone, home to some of the world’s richest but least-exploited iron ore
deposits due to a 1991-2002 civil war that claimed 50 000 lives and brought the
industry to a standstill.
That ended last year with the first ore shipment in more
than two decades, and now the International Monetary Fund is talking about
economic growth of 50% in 2012.
Such eye-popping statistics are sure to be the talk of Cape
Town this week, when investors and mining officials from across Africa rub
shoulders at the biggest annual industry jamboree on the continent.
But they are also a reminder of the wrenching forces that
big mining investment can unleash in countries in Africa, where nearly all
governments already have a poor track record of translating resource wealth
into broad prosperity.
Take war-scarred Mozambique. Last year, its currency, the
metical, was the world’s best performer, rising more than 20% against the
dollar as greenbacks flowed in to develop untapped coal deposits thought to be
among the most promising in the world.
Finance Minister Manuel Chang said in November he was happy
with the metical’s strength, but textile factory bosses and the managers of the
hotels popping up along Mozambique’s palm-fringed Indian Ocean beaches are
unlikely to agree.
Mining strength
By some estimates the former Portuguese colony is sitting on
23 billion tonnes of coal, two-thirds of South Africa’s vast reserves.
Brazilian mining giant Vale said in November it had approved
a $6bn expansion of its Moatize coal project in the northwest - equal to 50% of
Mozambique’s gross domestic product.
In South Africa, the equivalent would be $210bn a sum that
would swamp even its highly developed and liquid capital markets, and hurl the
rand exchange rate into the stratosphere.
Besides a soaring currency, Mozambique is also showing other
signs of the “resource curse” that has afflicted Nigeria and Angola, Africa’s
top two oil producers, where a tiny elite has grown fat on petrodollars yet
millions remain mired in poverty.
Figures provided to Reuters by Washington-based
anti-corruption group Global Financial Integrity (GFI) suggest $555m - about 5%
of GDP - flowed illicitly out of Mozambique in 2010 through “trade mispricing”.
That is about seven times the $85m GFI estimates leaked out
in 2009 through dubious channels.
Trade mispricing typically involves importers pretending to
pay foreigners more for imports than they actually spend. The difference
provides cash that can be discreetly put into banks or other assets abroad.
Extractive industries have been especially susceptible to
this kind of corruption, raising pressure on them to improve transparency, and
the explosion in mining investment and the import of big-ticket items is likely
to be a main reason for the increase in Mozambique’s missing funds.
GFI has estimated that in 2009 $27.5bn flowed illicitly out
of Nigeria, while in the same year almost $6bn was spirited out of Angola -
nearly a sixth of the country’s entire annual budget.