Tuesday September 21 2:53 AM ET Africa Prepares To Do Battle With Y2K Bug Full Coverage Year 2000 Problem By Simon Denyer NAIROBI (Reuters) - They may have started late, but most African governments insist they will be ready by December 31 if the millennium bug strikes computers around the world. The biggest problem is that not everybody believes them. ``Regardless of what countries have done, perceptions will make it difficult for investors to take positions in emerging markets, and particularly emerging markets in Africa,'' said John Clemmow, an investment advisor at Investec Securities in London. He said foreign investors were beginning to reduce their exposure to South Africa, even though the country has been widely rated as well-prepared for the turn of the millennium which falls 100 days from Thursday. There is even less confidence when it comes to leading African stock markets like Zimbabwe and Egypt. The Y2K glitch occurs because many older computers -- which allocated only two digits for the year in a date -- may read the year 2000 as 1900, causing computer systems to make mistakes or shut down. Ironically, the lack of development in much of Africa is an advantage when it comes to Y2K, because the continent is less reliant on computers than Europe or America. In Tanzania, for example, 80 percent of the country's 30 million people live in rural areas. Many are desperately poor, and some do not even have access to electricity or clean water. The millennium bug is the last thing they worry about. INFRASTRUCTURE FALLING APART In the capital of neighboring Kenya, the people of Nairobi just laugh when asked if they are worried about the infrastructure falling apart on New Year's Day. ``The point is that electricity doesn't work anyway, traffic lights don't work,'' said one management consultant. ``You just take it in your stride.'' The costs of coping with the bug might knock up to half a percent off growth rates across the continent, says Arthur Darragh, sub-Saharan economist at Barclays Bank. But he doesn't expect an economic crisis. ``For example, I haven't given it as big a weighting in my economic forecasts as my colleagues who look at the G7 (group of rich industrialized nations),'' he told Reuters. The International Air Transport Association says Africa is making ``tremendous progress'' in making its air transport systems millennium compliant. Although some disruptions to non-critical systems like baggage handling are possible, a spokeswoman said passengers do not have to worry about planes falling out of African skies. ``We will not undertake any flight unless we are absolutely confident about our ability to fly,'' she said. But some travelers will almost certainly want to avoid the continent. >From South Africa to Egypt and Zimbabwe to Mauritius, the State Department tells its citizens the risk of major disruptions is limited. But step off the beaten track and it is another story. The Central African Republic may have identified Y2K problems in its infrastructure, but hasn't the funds to tackle them. Major disruptions are possible in telecommunications, water and electricity supplies to the capital, U.S. citizens are warned. Cameroon is classed as ``unprepared'' to deal with the millennium bug, and there is a risk of demonstrations in Mali if civil servants do not get paid on time because of a computer glitch in the payroll system. CONCERNS IN HEALTH AND BANKING In South Africa, the central bank says people, not computers, are more likely to act strangely on millennium weekend. Worried about mass withdrawals from ATM machines, it plans to have hundreds of people on hand to iron bank notes, making sure they are flat and crisp enough to be accepted by all of the nation's 7,000 machines. Kenya's central bank says it is considering closing all commercial banks for two weeks around the millennium, while nearly 2,000 miles to the west, people are already withdrawing money from banks in Gabon. Some banks there are now only authorizing large withdrawals if the customer can show a need for the cash. The new year might not be a good time to be in an African hospital either. Bruno Adiko, the head of Ivory Coast's National Year 2000 Committee admits ``nothing's been done'' to fight the bug in the country's health service. ``The hospitals are not up to standard, so private clinics have been asked to provide emergency infrastructure,'' Adiko said. Adiko is also worried about disruptions at the country's ports, including Abidjan -- the biggest in West Africa. Not far away in Nigeria, the government admits this year's transition to democracy has disrupted plans for millennium compliance. SMALL BUSINESSES MOST VULNERABLE In most African countries, the big infrastructural problems should be avoidable and governments are aware of what they need to do. But experts wonder how widely the message has been heard. Small and medium-sized businesses face the greatest millennium risks, says Ann Edwards, East Africa's regional Y2K coordinator. It is a view echoed by Vipul Shah, who runs a business in Dar es Salaam offering Y2K advice and solutions. ``The consumer does not really understand Y2K,'' he said. ''They concentrate on hardware, ignoring applications and the digital embedded chips in their other equipment. What will happen when they lose data for their business they'd stored for maybe the last six years?'' Telling its own people what they need to do is one of Africa's biggest Y2K challenges. Convincing skeptical foreigners that risks are small may not be any easier. Britain's Foreign Office recently had some discouraging words for anyone thinking of a trip to Uganda, warning of the risk of widespread disruptions to power supplies and telecommunications. The only problem was that the information was six months old -- and inaccurate. Although Britain is helping to fund Uganda's Y2K taskforce, news that problems had been overcome got lost in the system. Britain's excuse...it must have been a computer error. (Additional reporting by Alan Raybould in Abidjan, Matthew Tostevin in Lagos, Luke Baker in Johannesburg, Wambui Chege in Dar es Salaam)