LONDON – Central Africa has lately been attracting some unfamiliar attention. Discoveries of large mineral deposits and other opportunities have brought a chance to diversify investment beyond the dominant oil sectors of Equatorial Guinea and Gabon.
Cameroon is expected to attract $10 billion over the next few years to develop some of the most promising new mineral reserves in the region, while Equatorial Guinea is pushing infrastructure development. Elsewhere, BHP Billiton announced the discovery of an estimated 60 million tons of manganese in southeastern Gabon, while France’s AREVA is drawing up plans to build a large mine in the Central African Republic to exploit uranium deposits.
But “natural resources” and “Africa” is a combination that usually triggers alarm bells, and Central Africa is no exception. There are significant political risks related to the overlapping political and business interests of the region’s entrenched ruling elites, presenting headaches for investors concerned about their reputations. Corruption is rampant, and most companies are often forced to work with government-picked partners, over whom control is severely limited.
A United States Senate report released in February revealed flagrant abuse of state funds in Equatorial Guinea. The son of President Teodoro Obiang Nguema Mbasogo was reported to have hired US lawyers, bankers, and real-estate agents to move more than $110 million into the US between 2004 and 2008, using the money to buy a $30 million house in Malibu, California, a Gulfstream jet, and countless luxury goods. He is now the subject of a criminal investigation and faces charges of money laundering, bribery, and extortion. The report mentions other ruling dynasties in the region, including Gabon’s Bongo clan, which is also accused of abusing public funds.