Clouds gather over Africa investment scramble

By Matthew Tostevin - Analysis

LONDON (Reuters) - Kenya's bloody crisis is a reminder of the fragility of a promised African economic renaissance despite the continent's fastest growth in decades.

The shine has quickly come off once-stable Kenya, until now a star performer, as its disputed election led to violence.

But wary investors are also following South Africa's wobbly change of leadership even though the continent's biggest economy is in a different league from others and much steadier.

And while second-ranking Nigeria is still seen as a promising investment, chronic unrest besets its main oil region and permanent questions hang over its political stability.

Some investors see Africa as a good bet because it is relatively isolated from global financial turbulence, but Kenya has made clear that long-standing risks cannot be brushed over.

"Now it seems it will be the other emerging markets that will benefit to the cost of Africa," said Richard Segal at Renaissance Capital, which is increasing its presence in Africa.

Sub-Saharan Africa is doing its best for decades -- lifted by a commodity price boom, debt relief, new investment from Asia, technological change and in some countries better management of public finances and an end to conflict.

The International Monetary Fund projects gross domestic product growth of 6.8 percent in 2008 from 6.1 percent last year and 5.7 percent in 2006. It is one of the few regions where growth is expected to accelerate next year.