12.06.2003 Africa Economic Summit 2003 Africa would seem to have a unique opportunity to attract foreign direct investment (FDI) and hence to build its international competitiveness by the investment uncertainties created by the needs for the US and EU to solve their particular economic problems. This was a theme running through the deliberations of the plenary session.
Adebayo Ogunlesi, Managing Director, Investment Banking of Credit Suisse First Boston, USA, and Co Chair of the Africa Economic Summit 2003, pointed out that Africa is but one of many competitors for FDI. But as Kwesi Botchwey, Executive Chairman of the African Development Policy Initiative (ADPO), USA, put it, improvements in Africa s macroeconomic framework since the 1980s have clearly been insufficient. The challenge, Botchwey bellieved, is to go beyond stabilization and to embed the microeconomic and other policies that encourage economic diversification and investment.
Infrastructure establishment is the most important, Botchwey said. There are many things that can and must be done to reduce transaction costs, to reduce the time needed to clear goods through ports and to reduce barriers to trade.
Linah Mohohlo, Governor of the Bank of Botswana, listed the factors that had helped lift her country into the ranks of middle income nations since its 1966 independence from Great Britain: A stable political system in which opposition parties and the media are free to operate and to criticize Government s embrace of the principles of transparency and responsibility A system of six year development plans Low levels of corruption Investment of fiscal surpluses in long term assets and; The realization that "diamonds are not for ever".
Trevor Manuel, South Africa s Minister of Finance, took the discussion beyond his own country and pointed to the collective responsibilities of Africa and its counterparts in the G 8. Africa must establish and develop strong supra national organizations if it is to succeed as a continent, Manuel said.
A challenge, Manuel said, is to manage and mobilize domestic savings Africa simply cannot rely on FDI for its development. The continent as a whole needs to develop indigenous institutions to achieve this. Market access remains important, but Manuel emphasized the critical need to develop and encourage intra regional trade. This would accompany the setting of standards and trade metrologies that would help African exporters become competitive in the most developed markets.
Taking a somewhat more philosophical view, Manuel is convinced that Africa needs to develop a feeling of self belief and a determination to "stay the course". But he immediately qualified this by pointing out that politicians who wish to be re elected could not focus exclusively on ultra long term economic policies. Voters need to see results within a single government s lifetime.
Manuel s views on investment were echoed by Brian C. Henderson, Merrill Lynch s Vice Chairman, Europe, Middle East and Africa, United Kingdom. He presented the caveat that Africa could not succeed if it aims simply to attract FDI. It also has to mobilize its own savings for investment. With the bursting of the tech bubble and the economic slow downs in the developed countries, Henderson said, there is a great deal of liquidity in the system. That presents an opportunity to attract investment. But, Henderson said, Africa should "get on with it" and not be distracted by outside events.
As a preliminary to wrapping up the session, Ogunlesi asked whether the NEPAD is really different, would it really make a difference. Manuel responded by saying that in the post cold war environment, African participants in the NEPAD were not asking others to do anything different from what Africans are doing themselves. He added, however, that the world as a whole could not afford to cut out or ignore a continent, which is home to 12% of mankind.
One participant asked, What is the basis for Botswana s success? Democracy has always been central to the country s system, was Mohohlo s reply. It is a democracy that embraces all people and which has given rise to Botswana s present stable political system and the transparency that reassures investors.
Summing up, Ogunlesi listed the fundamentals for economic progress: A stable democratic political environment with free opposition and a free press Stable monetary and fiscal policies Partnership between business and government An environment in which there is significant investment in infrastructure A need to look at intra regional investment
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