Africa to foreign investors: We’re open for business

Squeezing the poor for the sake of corporate profit? Or providing vital jobs and incomes? Whatever your view of foreign investors, analysts believe that business will be essential to African development.

With Africa’s population likely to double in the first quarter of this century, the private sector may be the only sector able to match this growth with precious jobs. In Africa, one job goes a long way towards protecting a family or community, as Africa Progress Panel member and former Nigerian President Olusegun Obasanjo told a recent conference of investors ahead of this week’s UN General Assembly meeting.

Besides, many issues confronting the African continent can only be resolved with private sector involvement. Only the private sector, for example, has the know-how to build power plants that will reduce Africa’s enormous energy shortages. Fortunately, foreign investors are increasingly keen to invest in Africa, because, as stated in our policy paper, “Africa – Investment Ready”, this is a great time to get involved.

Africa is home to seven of the world’s ten fastest growing economies, business regulation is getting better all the time, and the outlook for continued growth is good, according to both the World Bank and IMF.

Foreign investors say foreign investment would be higher if African countries had more stable public policies, more liquid stock exchanges, or even lower risk. They cite solutions that range from venture capital to use of donor funds.

But foreign investment does not have all the answers to African development. And in some cases, especially in the oil and mining industries, the social and environmental impacts on local communities have been disastrous.

But slowly Africa’s development paradigm is shifting away from aid dependency towards wealth creation as a model for the future. And business will be central.

At the Africa Progress Panel, we have several policy recommendations for African governments that will help increase both the quantity and quality of foreign investment.

Governments should strengthen regional economic integration, which makes Africa a more attractive proposition by creating larger consumer markets.

They should keep commitments to regional and international initiatives on corruption and transparency, such as the Open Government Partnership or the New Partnership for Africa’s Development (NEPAD). Lower corruption levels help attract foreign investment.

And governments should demand that foreign investment supports local companies, employs Africans, and transfers technology and skills. They should make job creation an explicit objective of economic policy, because job creation means sustainable and equitable growth.

Africa’s workforce is young and growing fast. Leaders across the continent and their partners must find new and effective ways to harness this energy and creativity. And business must play a central role.