02.06.2005 Africa Economic Summit 2005 Refreshingly, little time was wasted by Facilitator William Kalema, Chairman, Uganda Investment Authority; Commissioner, Commission for Africa, in getting discussions under way. Participants, he said, understood the issues.
There is a great deal of money to be made in Africa. But far from being a positive sign, it is seen as negative by Nkosana D. Moyo, Managing Partner, Africa, Actis Capital, United Kingdom, who pointed out that the high return exists because of the high premiums that have to be paid for doing business across Africa. That, Moyo said, is bad for consumers and serves to drive the poor ever more deeply into poverty. Unblocking the legislative, regulatory and capacity hindrances that create this situation will be the prime aim of the Investment Climate Facility (ICF) and be necessary if Africa is to achieve annual growth rates exceeding the 7% seen as being the tipping point for sustained growth, Moyo said. But the ICF must go beyond this. It should also address Africa s image, he stated.
Sir Nicholas Stern, Director, Policy and Research, Commission for Africa; Second Permanent Secretary, HM Treasury, United Kingdom, supported Moyo. People in the development ministries of the G 8 countries often have little private sector experience and have “lost the growth story”. Participation in the ICF should allow African countries to change the perspective of the G 8.
Should the ICF focus on improving the economic data on which countries base their economic programmes? The question was posed by Demba Ba, Sector Manager, Private Sector Development, World Bank, Washington DC. Ba wondered whether the ICF should participate in capacity building of African research institutes.
Mohammed Jahed, Chief Economist, NEPAD Secretariat, South Africa, welcomed the advent of the ICF. NEPAD, Jahed said, has thus far concentrated on producing policy papers. The ICF, he commented, will provide a practical programme.
Niall FitzGerald, Chairman, Reuters, United Kingdom; Member of the Foundation Board of the World Economic Forum; Co Chair of the Africa Economic Summit 2005, listed a number of issues that practical programme would need to consider and address.
Investors have choices he said and they are looking for political stability, sound macroeconomic management, good microeconomic management and the size of the market. Bringing up an issue that he said had only been whispered in the corridors, FitzGerald noted Zimbabwe. It, he said, “is messing up the neighbourhood, it creates the perception that all of Africa is chaotic and acts as a deterrent to investment”.
The meeting broke up for table brainstorming sessions that resulted in a range of issues it was believed the ICF should focus on. It also resulted in a list of things the ICF should not do. It should neither become an investment rating agency nor focus on so many issues at once that it misses the early successes that are necessary for momentum. But, it was suggested, only those countries that have signed up to the African Peer Review Mechanism or have indicated their preparedness to do so should be included in ICF problems. And this in itself would tend to give a seal of approval to those countries and their evolving institutions. There are, however, differences as to whether the ICF should be country focused or continent focused. The arguments for both were persuasive.
Essentially, though, facilitating investment will best be done by breaking down the barriers that hinder trade and free flows between African countries. The ICF will largely be funded by donors and governments, but must be run on private sector lines. Its value will lie in helping to introduce appropriate and simple tax, anti corruption and good governance regimes across the continent.
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