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The Borlaug Blog

Launching a New African Investment Marketplace

 
By Dr. Akinwumi A. Adesina
2017 World Food Prize Laureate and President of the African Development Bank

Africa is restless, entrepreneurial, ambitious and brimming with opportunities for enterprise, business and investment.

Many refer to Africa as having potential, but potential can’t be eaten, harvested or sold for profit. Potential remains theoretical until it is converted into action.

Africa’s economies are generally robust and buoyant, despite global reverses and commodity price shocks. A decade of solid growth took a temporary pause in 2016, but deep-rooted positive factors underlying long-term growth are now resurgent. African economic growth will improve to 3.8 percent this year, and to 4 percent in 2019, with a long sequence of robust growth to follow.

Confidence in Africa and the need to realize its limitless potential drives our work at the African Development Bank and our High 5 agenda.  Independent analysis by the United Nations Development Programme indicates that Africa will achieve 90 percent of the Sustainable Development Goals and 90 percent of Agenda 2063 by implementing the Bank’s High 5s: Light up and power Africa; Feed Africa; Industrialize Africa; Integrate Africa; and Improve the Quality of Life for the people of Africa.

Accelerated growth is the key to progress in the years leading up to 2025, the target year for achieving most High 5 goals.

Norman Borlaug memorably admonished many of us, “Take it to the farmer.” Much of our work therefore must take place in rural areas where agriculture is waiting to be quickly modernized, and we must give farmers the tools and technologies they need to increase yields and turn farming into a profitable business.

Africa will have the same population as today’s India and China combined by 2050. It will also have a rising middle class, rapid urbanization and the youngest population on earth.

It’s a continent in which consumer spending is projected to reach $1.4 trillion by 2020 and business-to-business spending $3.5 trillion by 2025.  The need for swift action to sustain this growth, kick-start the industrialization of farming, and close the gaping infrastructure deficit in Africa is therefore compelling.

This is why the African Development Bank is launching the Africa Investment Forum, the most important investment initiative for economic investment and infrastructure renewal ever undertaken in Africa.

The Africa Investment Forum is a unique and flexible platform for investment negotiations, finance, and transactions; and a genuine African marketplace for reaching deals to accelerate the economic development of Africa.

Let’s look at the figures. The infrastructure needs of Africa amount to between $130 and $170 billion a year; however total commitments came to $63 billion in 2016, with national governments continuing to be the main providers of infrastructure finance in Africa. This is a funding gap for infrastructure of between $67 billion and $107 billion annually.

But more generally, the overall investment gap for Africa to achieve economic development according to the High 5s and the Sustainable Development Goals  is an incremental annual outlay of between $200 billion and $1.2 trillion.

This kind of money cannot be provided by any government, sovereign wealth fund, multilateral development bank or high net worth individual benefactor. The African Development Bank is making its contribution, but this does not begin to close the gap.

However, every year, African governments, institutions and people collect about $500 billion in tax revenue, $60 billion in foreign direct investment, some $50 billion in foreign aid and approximately $60 billion in remittances. Most of these monies are increasing.

Within Africa, assets under management of domestic investors will reach $1.8 trillion by 2020, tripling from $634 billion in 2014.

So the money is certainly available both domestically and internationally. It is part of today’s record level of global savings (assets under management) of an estimated $111.2 trillion in value by 2020, invested around the world often at very low interest rates.

Our task is to bring 1 percent of these savings into African investments.

Financing Africa’s development therefore has to be a collective and cooperative task, requiring broad-based partnerships with the private sector and an appreciation of the realities of global investment drivers.

Africa is the next investment frontier.

But we need to urgently bridge the gap between available capital and bankable projects. Issues hindering project closure must be turned into win-wins for investors, governments, development finance institutions and other stakeholders.

This is the essential reason for the new and direct approach of the Africa Investment Forum, a multi-stakeholder, multi-disciplinary platform that will foster collaborative leadership for the economic and social development of Africa through the Bank’s High 5s.

The Africa Investment Forum will help reduce intermediation costs, improve the quality of project information and documentation, and increase active and productive engagements between African governments and the private sector.  

The inaugural Africa Investment Forum from November 7-9, 2018, in Johannesburg, will become Africa's own leading investment marketplace.

As a bank, we are committed to work with all partners and stakeholders to achieve Africa’s accelerated economic transformation through industrialization and agricultural modernization.

 

06/11/2018 8:00 AM |Add a comment
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