JOHANNESBURG (Reuters) - Soaring commodity prices are boosting African economies and state budgets, but strong growth on the poorest continent is much more deep-seated than just bumper revenues from ores and oil.
In a far cry from the strained budgets of late 2008 and 2009, when oil and minerals prices collapsed, treasuries in major hydrocarbon producers such as Nigeria and Angola and copper exporters such as Zambia are now flush with cash.
Not only do the flows allow more state spending on the infrastructure needed to entrench prosperity, they also facilitate borrowing -- as is the case with Zambia, which is looking for a $500 million loan from world markets in the next six months.
However, another sharp fall in commodity prices does not spell doom for sub-Saharan Africa, which the International Monetary Fund thinks will grow 5.5 percent this year and 5.8 percent next.
"It's not as direct a correlation as people might think," said John Green, head of global business development at Cape Town-based Investec Asset Management, which has $4 billion invested in Africa outside South Africa.
"In most of sub-Saharan Africa, there's a high level of entrepreneurial energy, and basic infrastructure in terms of communications and banking is now in place. It's very difficult to just shut that down," Green said, speaking at the Reuters Africa Investment Summit.
Proving the point is the vigorous economic performance during the 2002-2008 commodity boom by non-resource producers, such as Kenya, which was humming along at 5 percent annual growth or more from 2005 to 2008.
Similarly, the lesson from the 2008/09 economic crisis is that even in countries with a heavy reliance on mineral extraction, the non-mineral sector can run its own course regardless.
For instance, diamonds are more than a third of GDP in Botswana, the world's biggest producer of the gems, meaning the overall economy took a hammering two years ago when mines were forced to close for the first time in the country's history.
But while mining contracted by 20 percent year-on-year in 2009, the financial and business services sector grew 14 percent and transport and communications 12 percent.
Of course, oil prices sticking above $100 a barrel will impose a large inflationary burden on the continent, where even major exporters such as Nigeria end up importing most of their petrol and diesel because of a lack of domestic refineries.
But Africa, where food and fuel makes up a much larger slice of the inflation basket than in developed markets, managed to endure crude at $120 a barrel in mid-2008.
And should prices fall back, even producers should be able to weather the storm, according to a 2010 McKinsey analysis of Africa's performance that suggested as little as 20 percent of the region's growth in the last decade was attributable to soaring commodity prices.
Reflecting this, the majority of frontier Africa investors tend to target the region's evolving consumer middle class that is expected to increase its spending from $860 billion in 2008 to $1.4 trillion in 2020.
"The African growth story is not being led by commodity prices," said Kofi Bucknor, a partner at private equity firm Kingdom Zephyr, which is in the middle of investing a $429 million fund across the region.
Zephyr's existing investments include a South African electricity transmission company, a tuna-processing plant in Ivory Coast and a Barcelona-based firm specializing in producing low-cost housing for north African markets such as Morocco.
In general, banks and telecommunications firms are key investment picks because of the explosive growth they are expected to register in the world's last major untapped region.
A study by consultancy Bain released this week suggests the continent's financial services will grow by 15 percent a year over the next decade, and account for nearly 20 percent of regional output in 2020, from 11 percent now.
"It's a story about economic and political change. It's a story about opening up markets and attracting capital. And it's a story about a growing consumer class that is seeing the effects of globalization, changing its spending habits and asking for a wider range of goods and services," Bucknor said.
"Commodity prices have just been the icing on the cake."
By Ed Cropley, African Investment Correspondent