Out-Law News 2 min. read
06 Apr 2017, 3:42 pm
In a speech delivered on behalf of the African Development Bank (AfDB) president Akinwumi Adesina to the Africa CEO Forum in Geneva, bank vice-president Pierre Guislain said: “Africa needs policy consistency, predictability, and stability of its business environment. It’s encouraging that Africa accounted for over 30 percent of the business and regulatory reforms globally in 2015.”
However, Guislain said FDI flows “are not following this trend”. “Excluding Caribbean financial centres, FDI to developing economies in 2015 increased by 9% to $765 billion from 2014,” Guislain said. “But Africa accounts for only 7% of total FDI in developing markets.”
Guislain told the CEO Forum, which also attracted political decision makers from more than 40 African countries and “the most active bankers and investors on the continent”, electricity is “at the top of the list” of infrastructure investment needs.
“Some 645 million people do not have electricity,” Guislain said. “Over 95 percent of mobile telephone tower sites in off-grid regions run on inefficient traditional diesel generators, accounting for up to 60 percent of network operating costs. Introducing cleaner off-grid solutions will provide business opportunities to investors.”
Guislain said the AfDB is calling on Africa to “unleash the power of the private sector”. “Governments should not be nervous about the private sector,” he said. “They must fully embrace it, incentivise and enable its full potential... Africa must put in place a conducive and predictable macroeconomic, business, property rights and fiscal environment. Democracy and freedom of speech should deepen. Governments may change, but good policies should not go out with every new government.”
According to Guislain, investments in artificial intelligence, robotics, nanotechnology, materials sciences, bio-technology and computer engineering “will define the future economies”. He said the AfDB also wants to see “accelerated regional trade”. “For this, we need investments in critical regional infrastructure, especially roads, rail and aviation. With the Algiers-Lagos highway due for completion, renewed drive for the construction of the Lagos-Abidjan highway and the Northern corridor in East Africa, the future looks bright. But for these investments to generate impact, we also need effective integration of markets, competition in services and fluid border crossings.”
Guislain said the conclusion of the Continental Free Trade Area (37-page / 3.04 MB PDF) “will boost growth, trade, and investments in Africa”. “Investments in digital infrastructure will help unleash greater financial inclusion, new businesses and a services revolution.”
FDI to East Africa grew from 2015 to 2016, despite an overall fall across the continent from $87bn to $66.5bn, according to report published last year by Analyse Africa. Analyse Africa said 705 projects were backed by foreign investors throughout Africa in 2015, with infrastructure taking about 44% of the inflows.
According to the separate Deloitte African Construction Trends report published last year, a total of 286 construction projects were launched in Africa in the first half of 2016 worth a combined total of $324bn.
That report said each of the projects on which ground was broken up to 1 June was valued at $50m or more. However, the report said the number of projects qualifying for inclusion “fell by 5 percent year-on-year, while the value of included projects decreased by 14 percent, due in large part to the headwinds that countries are experiencing on account of a weak global macroeconomic environment and low commodity prices across the board”.
