Cape Town - African economies are implementing reforms that are creating opportunities for investors in areas such as infrastructure, where capital was essential to drive development, said business, government and civil society leaders in a session on Africa’s investment environment at the World Economic Forum on Africa.
“We are removing all barriers to private investment,” said John Rwangombwa, Governor of the National Bank of Rwanda, noting that his country had reduced the time it took to register a new business from two weeks to just minutes or hours by using an online, one-stop platform.
Rwanda’s competitiveness and ease-of-doing-business rankings had risen as a result, he noted.
“This creates an environment that attracts investors to bring in capital mainly through FDI (foreign direct investment) and also through IPOs (initial public offerings),” he said. “The main function of government should be to create an enabling environment.”
Due to the improved business climate, Rwangombwa remarked, “private investors are willing to co-invest with government in infrastructure”.
Rwanda had set up a clear framework for private investors to fund projects, notably in the energy sector, which previously the government alone would have done, he explained. If an economy in Africa wants to attract capital from within or outside the continent, the ability of investors to repatriate profits is key, Rwangombwa reckoned. More reforms were needed. To stimulate intra-African investment, easing controls on the movement of people across borders would be important, he added.
“That will really catalyse capital,” he stressed.
Simpiwe Tshabalala, joint Chief Executive Officer of Standard Bank Group of South Africa, agreed that there were significant investment opportunities in infrastructure in Africa due to the severe lack of adequate roads, ports, airports and other facilities.
“We have among the lowest investment to GDP ratios among the regions, which suggests that there are huge opportunities to execute projects that are developmental in nature but will remunerate those willing to take risks,” he said. He advised investors to partner with local players.
“There is a lot of work to be done in infrastructure,” said Nathan Kalumbu, President of the Eurasia and Africa Group at the Coca-Cola Company, Turkey.
“The infrastructure deficit is close to double what we are currently investing” in the continent. But such enormous and complex challenges “cannot be resolved by any single institution or organisation”, he said. The key for business was to build innovative partnerships with government and civil society to pursue projects that would have social and economic impact.
Coca-Cola, for example, has worked with the Bill and Melinda Gates Foundation to help fruit farmers in East Africa bring their produce to market by accessing the company’s supply chain. This collaboration was an example of private capital catalysing African growth and development.
“Private finance can help drive it and make it sustainable over the long term,” concluded Mark Suzman, President of Global Policy, Advocacy and Country Programmes at the Bill and Melinda Gates Foundation, in the United States.
ANA