Africa's powerhouse

April 08, 2002

A SATELLITE picture of Africa at night says it all: Most of the continent is dark, except for South Africa, which glitters like a diamond. Indeed, less than 8 percent of Africa's 722 million people have electricity.

To Eskom, South Africa's state-owned electric utility, this presents a unique opportunity. In the eight years since the end of apartheid, it has built power installations in Tanzania, Namibia, Mauritius and Swaziland and is evaluating many more projects.

Other South African companies are equally aggressive. Southern Sun, the country's largest hotel chain, has expanded to Zimbabwe, Kenya, Tanzania and Mozambique. Meanwhile, its parent corporation, South African Breweries, has acquired so many local brands it now dominates the beer market in most of sub-Saharan Africa.

"I think we are going to see more and more South African economic imperialism taking place over the next few years," says David Shapiro, a Johannesburg stock market analyst.

Indeed, many target countries of the South African economic invasion see it as imperialism that might keep their domestic industries from maturing. Worse, many acquisitions have occurred at bargain basement prices as South Africans have taken advantage of the rand's artificially high value.

Those conglomerates are not limiting themselves to Africa. A case in point is South African Breweries. It is in talks to acquire Miller Brewing Co. from Philip Morris. The company has previously bought beer makers from China to Poland.

As the continent's economic and political powerhouse, South Africa must tread lightly. Otherwise, increasing resentment is likely to follow and it will be seen as a bully.

But the bottom line is that South African acquisitions have introduced badly needed new work methods and state-of-the-art technology in a variety of fields, ranging from banking to mining. And such modernization is unquestionably beneficial.

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