Investing in Africa: Part Two

As the 23rd annual World Economic Forum (WEF) in Africa kicks off in Cape Town, business, political, academic, and other leaders of society are putting their heads together around one issue: how to turn Africa’s glowing promise into an attainable reality – for business, for politics, and most importantly, for the people on the ground who remain notoriously excluded from the glimmerings of the African Renaissance.

Under the theme of ‘Boosting strategic infrastructure’, the 2013 WEF will examine how economic growth, regional integration, and social development continue to be hindered by economic, social, and ‘soft’ infrastructural gaps. It has been estimated that investments in strategic infrastructure could increase the productivity of African businesses by 40%.

Boosting strategic infrastructure

The flip side is that Africa is at risk of sacrificing about 2% of GDP growth every year if it doesn’t get this investment. Key questions at this year’s Forum will centre on:

  • speeding up crucial infrastructural reforms,
  • bridging the gaps in the provision of infrastructure financing, and
  • harmonising cross-border legal and regulatory standards to increase intra-African trade.

With rapidly rising consumer spending in Africa, non-resource-intensive sectors – such as retail, energy, and telecommunications – are attracting growing numbers of regional and global investors. This is all very well, but the fact remains that sustainable economic development rests first and foremost on manufacturing and agriculture – both of which depend most heavily on road, rail, water and energy infrastructure.

The challenge is how to attract investors to these areas which are perceived as offering low returns in exchange for high investment costs.

Sustainable economic development

A feature of this year’s WEF will be a joint, high-level roundtable on the topic of ‘Building Private Equity and Private Capital Markets in Africa’. Jointly organised by the WEF and the Economic Commission for Africa, the roundtable will bring together a range of regional and global private investors, government officials, policy makers, and development finance experts to explore ways of promoting and accelerating private equity investments in Africa.

Discussions will centre on:

  • how private capital (e.g. private equity) can benefit Africa,
  • the key drivers and roles of private capital in Africa,
  • how to overcome challenges facing the industry (such as finding a trusted local partner, project feasibility, fair risk-adjusted return expectations and capital markets liquidity), and
  • how policymakers can promote and craft regulation that fosters the responsible development of private capital markets in Africa.

Investment in Africa, and developing the perception of Africa as a promising investment destination, is key to the continued growth, development, and success of the region. Through the World Economic Forum, key insights will be revealed…

What are the challenges and opportunities Africa faces as you see them?

David Okwara

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