Africa’s investment ebb and flow

2010-05-08 09:11

According to delegates at the 20th World ­Economic Forum on Africa,

the continent needs to do more to boost foreign direct ­investment and ­reduce its ­reliance on portfolio

inflows that are vulnerable to ­crises ­elsewhere in the world.

Sub-Saharan Africa attracts 0.96% of global foreign direct investment, the lowest of any ­region, Tanzanian

President ­Jakaya Kikwete said at the close of the three-day conference in

Tanzania’s commercial ­capital, Dar es Salaam.

South African Finance ­Minister Pravin Gordhan said: “We don’t want

quick flows in and out of Africa. We want ­foreign investment that results in infrastructure ­development,

industry and job creation, and a more sustainable platform for economic

growth.”

The call for more long-term ­investment comes amid the Greek debt crisis, which

­threatens to spark ­another wave of risk aversion that sent ­emerging market

­currencies tumbling in 2008.

The rand touched a six-month intra-day low on Thursday on the back

of concerns that the crisis would spread and undermine growth in sub-Saharan

Africa, which the International ­Monetary Fund estimates will double this year

to 4.7%.

The World Bank’s vice- ­president for Africa, Obiageli Ezekwesili,

said: “The last thing Africa needs right now is the ­impact of contagion. The

­advanced economies have to take every necessary ­coordinated action to stem the

tide.”

The conference was held in East Africa for the first time,

­attracting a record number of delegates of more than 1 000 as rising commodity

prices helped improve the outlook for the world’s poorest continent.

According to the African ­Union (AU), the global economic crisis

that started in 2008 pushed 27 million more Africans into ­poverty, putting the

­continent in a “precarious ­situation”­.

The AU said the proportion of African workers earning less than $2

a day probably increased to 86.6% last year from 82.2% in 2007.

Leaders including Kikwete, Mozambican President ­Armando ­Guebuza

and Kenyan Prime Minister Raila Odinga said the right economic ­conditions –

such as a stable ­political system, ­predictable ­economic policies and good

­governance – needed to be in place to boost investment.

Kikwete said: “Africa is at the periphery of the global economy. It

can’t be left to continue.”

The World Economic Forum discussed ways that businesses and

governments can tackle ­corruption in a session entitled Corruption: The

Elephant in the Room.

The forum said corruption was “conservatively estimated” to cost

Africa more than $148 billion a year, increasing the cost of goods as much as

20%.

Executive manager of Africa Progress Panel Michael ­Keating said:

“Africa is really moving ­despite the governance not ­because of it.

“Good governance rests on politicians being serious about it. A lot

of African leaders are but there’s a lot of leaders in Africa who aren’t.”

Leaders also ­highlighted an ­infrastructure shortage that ­hinders

trade and growth.

The continent needs to spend $93 billion a year on power, transport

and water projects over the next decade to lift growth and reduce poverty, the

World Bank said.

Director-general of the WTO Pascal Lamy told the conference that

aside from a funding shortage, poor infrastructure was ­hampered by a lack of

integration between economies.

– Bloomberg



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