Tackling the white elephant

This past week’s Africa Investor events aimed at linking US investors to Africa generated excitement and optimism about what is in store for the continent. The feeling was palpable in the present audience which included political leaders, business leaders, bankers, investors, and international civil servants.

There was broad recognition of Africa’s potential as a place to invest, make money and provide the world with much needed goods and services -at rates unavailable anywhere else. However, equally as important was the recognition that all of this growth and potential rests on good governance and effective partnerships where all stakeholders have clear roles and responsibilities – a key message in our 2011 Annual Progress Report.

Governments need to improve investment climates, promote competitiveness, strengthen the rule of law, and integrate with other African economies. The importance of regional integration cannot be under-emphasized. Without integration, the market size and economies of most African countries will not achieve their full potential and will remain marginalized. Moreover, the huge challenges and gaps -whether in infrastructure or services - cannot be managed by the public sector alone; partners are paramount. Weak governance, corruption, inefficient institutions, and lack of skilled workers –all elements that used to be part of the traditional white elephant in meetings trying to promote investment -  were discussed as Africa’s potential and success stories were shared.

The private sector acknowledges Africa’s potential and investors are already extremely active where institutions are solid, the law is respected, and a strong vision articulated by the government and their people.

Africa finds itself at a unique inflection point where long-term growth and private sector development will reflect interrelated social, political and economic transformations such as rapidly growing young populations, rising consumer demand from an emerging middle class, increasing productivity linked to urbanization, and an expanding labour force. Indeed, private sector flows to Africa are already higher than official development assistance. Furthermore, in 2010, foreign direct investment flows to Africa surpassed those received by India. This time it is about sound business and investment opportunities.

African leaders must not squander these opportunities. They are well aware of what needs to take place to ensure that Africa’s seizes the opportunities wisely but they need collective support. As our chair, Kofi Annan remarked on Africa’s progress, “There is no lack of resources, no deficiency of knowledge and no shortage of plans. Africa’s progress rests...on the mobilisation of political will, both on the continent and internationally”. It is time for Africa’s leaders; international partners and the private sector to each play their role.