erik: welcome to the africa opportunity. we came here to south africa to give you a close look at the extraordinary pop -- extraordinary potential this country offers investors worldwide. veryought together the best in corporate, official, and non-government leadership across debatewth -- globe to the future of africa. from infrastructure to technology, how will africa attract the capital it desperately needs and avoid the pitfalls of waste, corruption, and conflict that have left this promise unfulfilled.

you will find out on "the africa opportunity." in africa, the optimism is infectious. the population is young, growing, and increasingly educated. everywhere you look, there is promise to be made. commodity prices have plunged, budgets are squeezed. currencies are slumping and foreign investors are pulling back. is there still a full case to be made for africa? that is one of the questions we stopped to answer in cape town. -- he mowed either heme -- africa has been there before. years in decline.

today, africa economy is three times larger than we were at other times it sometimes five times. there have been a few countries, growing countries in africa. it depends on investment. two things, the number of countries who have to make major decisions on reform. that investment is in

effect now. erik: why are they so confident they will make these adjustments ? those opportunities have come and gone before. policy. a good it is like a triangle. it is not absolutely deliverable. we have the ability to do ever -- to deliver everywhere. erik: he is hardly alone. the view in africa is shared by industry and government. as i found out and are business and economic summit in cape town. >> the acknowledgment that we

need to do things differently, move a lot faster. our populations are growing. opportunity to grow that economy is here and that is what and in me about africa particular, our own governments are beginning to accept that we need to turn the corner. looking into the past and blame is old stuff. we want to see a growing economy. >> africa is increasingly stable, increasingly democratic. tois increasingly willing work with the private sector and take on reforms that are necessary. africa is a continent, not a country. there are wide variations among what i just said. mcc is an agency that is focused on partnering with african

agencies who are committed to governance, poor countries who are willing to undertake reforms. or example, we are working in ghana. the portfolio has been roughly interested in infrastructure. and increasingly working in energy under president obama's our africa initiative. i mentioned a tough reform, i mentioned the idea that we need to have more transparency, independent regulators for example, and we are seeing movement on those. >> we are here to try to help, country by country is to develop the data sets that they need. to help them create the capital market efficiencies and infrastructure and technology to grow their capital markets and basically facilitate greater visibility through our bloomberg news team, writing the kind of

stories about leadership and economic challenges and opportunities that exist on the african continent. we have been here for a relatively short. of time, but as we look at the future, we look at africa as a very important long-term growth opportunity. we also look at the perspective, we have about 400,000 users of our product every day and they want to know what is going on in africa the same way they want to know what is going on in lots of other places. we are the conduit and facility are for that information and to get people the kind of data they need to make for investment decisions. >> sub-saharan africa has grown their population at a dramatic faster rate than the world. look at that. pretty remarkable statistics. we have heard of these figures but here they are for everyone to see. patrick, you are the insurance

guy. for arguments sake you are the actuary on among us. how important are democrat -- --ographics question mark demographics? patrick: urbanization is the key here. africa at a much slower pace than china of course, where it was driven indie center. you look at the doubling of the population between now and just short of 2050. this is a very exciting market. this is back to where the irish were about 50 years ago and they deported most of them. for africa, it is very exciting

in the relevant markets. it is not true across all of africa. you have to be selective. 17example, growth rates in of the sub-saharan economies of plus, you have to pick the ones you want to go after. is, you will see it. it is like a teaming anthill. people working, making money, but not living in the way we are used to seeing in the west. we have to understand how to cap -- how to tap into that. talked about what it will take for africa to meet the bull case, education, infrastructure, further diversification.

your concern is implementation, why? we take africa, literally, figuratively. the one thing i find it of theging is most african countries all have fantastic vision, very clearly articulated. they all have it. what my dad used to say is, if you want your dream to come true, make sure you do not oversleep. that is what i see in most of these places. suffering, we know what we need to do, we do nothing about it. those countries we see getting up and doing it are succeeding.

look at ethiopia, kenya, those are getting off of their but are doing it and moving on and showing the world it is possible . what i challenge all of us and our countries and our governments is really, let's get up in just do it. erik: for every bull case, there is a bear case. that is next on "of the africa opportunity." ♪ erik: africa rising remains a

rally and cry for bowles. selloff, and slumping growth in china, a key trading partner for many african nations. at the bloomberg africa and economic summit. africa's challenges and potential solutions. talk about the africa rising narrative. is it dead? is it forced? what is going on and what can we expect? >> i always said there were 4 drivers, recycle, politics and policies, demographics.

i think the super cycle is on, you now need the policies to address that and that is probably what you are not getting it some places. this is the key thing going forward, the key policies governments will put in place. i think the entrepreneurship is still there and we have everything, still a very bright future in terms of development. >> you have done a lot of research on the relationship youeen china and africa? do think the african economy has materialized in china? are they reaping the conferences are being far more did -- far too dependent on one country? it is something i have been looking at for a while has been how china has been research

invested growth model. what you've seen since 2000 until now, a paralleled trajectory of paralleled growth between sub-saharan africa and china. correlationre is and causation. china, about a year ago, looking at when things were good, there were very strong similarities, parallels between africatus of sub-saharan and south east asia. now we are seeing a divergence on the economic side, the on our side of the world, policy inorm, structural reform, certain economies of to

reposition that toward the asian growth trajectory trend. d's see a lot of potential for stronger relations between the u.s. trade and africa? exportsabout 1% of u.s. actually find a destination in sub-saharan africa. it is about 6% of the export of the bank portfolio. that is not surprising that the capital markets are not as deep. i think there are a lot more opportunities here then u.s. companies have taken advantage of. we have been active in power, transportation infrastructure. it is still a lot more opportunities and -- in every one of those areas. one of our goals for this trip is to encourage more u.s. companies to participate and cap into it. i think the policy change is

what is going to be needed to really attract companies here. it is not easy place to build -- to do business and companies have a lot of other options. i think the change in the commodity prices -- it is a unique opportunity because it will encourage and hasten to move to some of these reforms a policy change that of the needed for quite some time. >> we were talking earlier about africa said your organization would be involved in that. slower than anticipated because of permitting and credit hurdles, is that what you are talking about? >> power africa is a powerful initiative, committing $7 billion in capital for power projects here that has been slower than we would like. we have just not seem the deals come through. i think part of that issue comes back to what they go -- what

miguel said. it is not been as easy to put in place in a number of countries. i think that has impeded some of the power generation. >> do you deal with a lot who are trying to invest in africa? >> our government is starting to see it on some of the bureaucracy. there are some challenges. i still really think it is bureaucracy which is holding things off. i think it is really, at the end of the day, two things. the lack of progression on the infrastructure side and this is the serious one, the long-term one. and the short-term one, you have some very wrong policies which add dramatic a fax on the effects. if you do not have some

certainty on the effects, even if it is progressive devalue of -- devaluation, that goes nowhere. that affects the ability to invest. i think investors still want to .ome and let me just use there are three types of investors i see. on one hand you have strategic investors, multinationals. they are betting on africa because they see the demographics. they see the fx issue as a minor problem. some of them can live with that. then, on the opposite side you have institutionally invested by africa.those are off the worst thing you could do is buy one in today and the following day have the percent

devaluation. those are out of africa and they actually look at africa as one, which is very sad and very wrong. in the middle, you have financial investors. they can deal with this, they will adjust their valuations and machinations, but they can deal with the uncertainty. over the short-term, some uncertainty but still very positive that there are projects and opportunities and capital willing to come. erik: much more coming up from -- bloomberg africa and business and economic summit. as the africa opportunity continues. ♪

erik: africa is the world's second-largest landmass next to asia. africans may celebrate their differences but the investors do not. the collapsing kalama -- awaydity prices is driving dollars. foreign investment plunged in africa. continent, not a single country. look at the economies of

sub-saharan africa and that is clear. nigeria's gdp has soared. sedan's has not done much better. companies quickly learn no two countries are alike. the richer you on the red sea, is dead last. progress is crucial. he says they lie at the heart of any tangible shared improvement in the quality of life in citizens. after years of ain't, the ib rahim index has stole -- stalled since 2011. over and over on stage and in conversation, business leaders at the bloomberg africa and business economic summit explain why.

this is a time where we would like to accelerate our investing, not pull back. we are in seven countries today, ideally we would be in 10-15 different countries. one of the countries nigeria, we are not at majority yet. we think this time is very good. >> i think the change in commodity prices is an enormous opportunity. this economy has to diversify, whether it is south africa, sub-saharan africa. the economy is only resource-based. ultimately will not be sustainable economy. in many ways, i think this is good news. sooner is better than later and i think diversification, at the manufacturing, textiles, many other things, make it far more sustainable. >> when you think about africa,

you have to look at it from a long-range view. we go through these cycles. the key is how people react number one, number two is how you are able to continue investing for the long haul. i think that is the key. >> this is a great story about africa. if you look at the kinds of returns we can get on something like a wind power investment, wind farm. i was there yesterday at hope field. there we are looking at a gross return of over 20%, even if you adjust down for a depreciation in currency. you have to say that that net, after all expenses, a return

that is well into double digits. on a currently at -- currency adjusted net basis, your still looking at double-digit returns. up next on the africa opportunity. experts the on the very immediate fiscal and committed -- political challenges facing south africa. ♪

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♪ erik: nowhere does "the africa otherunity" seem real than here in south africa. from everything from a thriving wine economy -- industry, the government is in shambles. with a panel of

economic experts to talk about south africa 's finances and the elephant in the room, the countries credit rating. obviously difficult times. we have seen a plunge in the last couple of years >>. we have also seen a possible downgrade, perhaps i will just kickoff and asked the representative, conrad. what do you make of the budget? could get everybody downgrade,the term we call it noninvestment grade. look at is what our concerns are and contrast it with the budget we have seen today. the new look at the negative outlook we put on our industry last year