South Africa: a great story at the wrong address.

That was the cliché dredged up at an unprecedented gathering of prominent South African business and government leaders Tuesday at New York University’s Stern School of Business. Like many clichés, it contains a kernel of truth.

The forum was co-hosted by the South African Chamber of Commerce, the Consulate General, and NYU. James Wolfensohn made certain he was there. It was targeted at financial types who might be tempted to invest either directly or indirectly in South Africa, and reflected the country’s desire to advertise the meaningful accomplishments of recent years.

Indeed, the meeting seemed to us like a significant coming-out party. Why? Because South Africa is hosting the World Cup in 2010. The pride with which the country anticipates this event is evident. Like Beijing’s 2008 Olympic debut, the occasion symbolizes South Africa’s assumption of a seat at the world’s table.

The timing appears propitious. Peter Linley, chief investment officer of Old Mutual Asset Managers, the largest such institution in South Africa, made the case that the country’s markets have fundamentally changed. He thinks the political risk in South Africa has been overestimated, and acknowledged that the country’s image has been unfairly tarnished by regime changes in other African countries.

Other speakers underscored the positive outlook. The country has been growing steadily for six years, inflation is under control, the government is close to running a budget surplus, the Johannesburg Stock Exchange is ranked in the top 20 exchanges worldwide in market capitalization, and the country’s credit rating has gradually improved. South Africa was host to 7.4 million tourists last year — a record — and the stock market has been on a tear.

In short, South Africa seems to offer what a lot of emerging market investors are seeking — solid growth, improving infrastructure, rule of law, political stability (the African National Congress is deemed well organized and has been in place since 1994) and a government that is fiscally conservative. Also, the country allows free movement of capital, and most people speak English.

Everything, in short, but a better address. Sadly, for many Americans South Africa has disappeared from sight. During the struggle against apartheid, most schoolchildren could recite the essentials about South Africa — the leaders’ names, the population split, the important tribes.

Today, many people lump the country in with other African nations fighting AIDS, poverty, illiteracy, crime, and instability. And, sadly, some of that generalization is warranted. The AIDS epidemic is indeed abroad in South Africa, as it is in manyAfrican nations. And, there is an entire generation that the apartheid regime failed to educate. That makes for a “skills shortage,” according to several of the forum’s speakers, and also for a well-known crime problem.

But, as Jabu Moleketi, the country’s deputy minister of finance remarked, “You are reading less about wars in Africa and more about elections. “He cited the situation in Congo, where elections were recently held for the first time in 40 years. He and others stressed the efforts of South Africa’s government to build the country’s infrastructure and to set the economy on a steady course.

For the country’s leaders, this must be an emotional journey. Fikile Magubane, the country’s consul general in New York, expressed her pride in these terms. “South Africa is the story of how courageous policy choices made a decade ago are bearing fruit. We have had the longest sustained expansion in our history, with low inflation. For the first time in this generation we are creating jobs faster than new entrants are coming into the workforce.”

The forum Tuesday set the stage for a number of road shows planned for stateowned companies like Transnet, which operates the country’s ports, pipelines and rail facilities, and Telkom, the telecommunications company. Telkom is listed on both the NYSE and the Johannesburg exchanges. Privatelyowned companies are also reaching out to foreign capital markets.

Interestingly, numerous company managements on Tuesday’s roster were most excited about the opportunities they saw for expansion into other African nations. South Africa is certainly the continent’s leader in many ways, and they expect their superior infrastructure and financial management to allow substantial incursions into their neighbors’ economies. Telkom, for instance, is targeting Kenya, Botswana, and Uganda either directly or through acquisitions or joint ventures.

Mr. Linley described the country’s financial structure as of “first-world”quality, citing capabilities such as electronic three-day settlements, and liquid capital markets. Asked to speak about the outlook for the debt markets, Mr. Linley acknowledged that much of the easy money had already been made in the sector, as inflation and interest rates were brought under control. He cautioned that investors have to take a view on South Africa’s rand, and that with yields at around 8.4% on long bonds, the market may be fully priced. Similarly, the equities markets have almost doubled in the past three years, but he considers valuations still relatively attractive. He thinks the country is well positioned for growth, and cites job creation as a major accomplishment.

What are the risks? Thomas Barry, founder of Zephyr Management, a private equity firm which invests in Africa, says AIDS is a major problem for South Africa, and also the possibility of “an implosion in Zimbabwe.” He says that there are 1 million immigrants from the neighboring country already in South Africa, but that number could swell to an unmanageable level if Zimbabwe’s troubles worsen.

Another risk that was not mentioned is a fall-off in commodities prices, which surely have boosted South Africa’s economy. Though the mining sector was not discussed Tuesday, it remains an important part of the economy, and has no doubt benefited from the rise in gold and other precious metals prices. However, with the country focused on attracting foreign investment and on building infrastructure, growth elsewhere may compensate for some slowing in the minerals trade.

Overall, we expect to see more promotion of South African companies coming through America. With luck and persistence, they will put the country back on America’s radar screen.

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