HAROLD MACMILLAN said that “the wind of change” was sweeping across Africa when he was British Prime Minister in 1960. That wind is again blowing through the continent, although this time it is bringing economic rather than political change.

Africa is gearing up to meet the seemingly insatiable demand for natural resources from the growing economies of India and China. It is now a leading supplier to them of oil and precious metals and produces 29 per cent of the world’s gold supply, 46 per cent of its chromium and 48 per cent of its diamonds and platinum.

Teams of Asian contractors are setting up drilling and mining operations all over Africa, and Max King, a strategist at Investec Asset Management, which has recently launched a Pan Africa fund, points to a number of emerging success stories across the continent.

When Botswana gained independence in 1966 it was a dirt-poor country standing in the shadow of its neighbour, South Africa. Today it is one of the most prosperous in the continent, with an annual growth rate of 6 per cent and per capita income of $10,000 (£5,250) a year, not far short of South Africa’s per capita income. It has a stable government and has carefully managed its diamond resources and booming tourism trade.

Fifteen years ago Egypt was a poor country riven by political and religious extremism. Difficulties continue, but it has since embarked on comprehensive economic and political reforms, including tax cuts and privatisation, and its annual growth rate of 5 per cent is expected to rise to 8 per cent. Last year the Egyptian stock market returned 150 per cent in dollar terms, making it one of the best-performing stock markets in the world.

But the real motor driving growth in the continent is South Africa. Mr King explains: “It is a regional superpower, accounting for more than half of Africa’s total stock market value and is home to many mining companies, as well as banks, brewers and other consumer-orientated companies. It has not collapsed since the handover to majority rule but has emerged as a prosperous and stable country.”

Apart from South Africa, however, there are few locally listed investment opportunities on the continent and few foreign funds investing there. Jason Hollands, of F&C, the asset manager, says: “While some local stock markets may have gone through periods of apparent stellar performance, access to them is difficult, gains can easily be wiped out by movements in exotic currencies and, in some cases, exchange controls are in place.

“Standards of corporate governance are poor, corruption is endemic, political instability is high and government interference prevalent.”

John Hatherly, an independent commentator, adds: “If you look at the world map of emerging economies, you see that Asia is doing well and Latin America is improving fast while Africa has made relatively little progress. Countries, such as Angola, which should be incredibly wealthy, are still poor, while other potentially rich countries, such as Zimbabwe, are going backwards.

“Lack of stability is a big problem. Africa has suffered from countless civil wars; and while you have civil war in a country no one is going to invest. Another serious problem is Aids, which is hitting hard in many countries in sub-Saharan Africa. ”

Mr Hatherly says that, given the concerns over corporate governance, the most effective way to gain access to the potential of Africa, while minimising the risks, may be to buy shares in an international company with extensive interests in Africa, such as Anglo American.

Another option is to search among UK-listed small and mid-cap shares for energy and mining companies with a strong African presence. He says: “It may be that the best way into Africa is to go prospecting in the London-based alternative investment market.”

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