Economic Analysis: Investing In Africa’s Next Stage Of Growth

Investment in Africa: Capital will go where it is looked after

Accra, Jan. 8, GNA – There are many ways to measure development in a region, a country or even a continent. Freedom, prosperity, health and stability are all pillars of progress, and opportunity is the foundation. But this week as I return to Africa for the first time in ten years, I am reminded that investors are one of the most reliable indicators of development and overall progress. Investment flows signal recognition of an opportunity, and can herald accelerating development beyond aid-based need.

There was a time when relatively few foreign investors recognized Africa’s potential. But for several years now, Africa has been widely seen as a region that not only had a great need for investment in infrastructure, healthcare, technology and agriculture, but also a place that offered investors some of the best opportunities on the planet.

Today, many of the world’s fastest-growing economies are in Africa, and the World Bank, which measures the ease of doing business in 190 countries around the world, recently identified Sub-Saharan Africa as the region that leads the world in adopting reforms to improve the business climate.

These strong rankings and growth rates are certainly impressive. Perhaps even more compelling are the other signs that confirm Africa’s improving business climate is a long-term trend that will likely endure through the ups and downs that all economies experience. Recent research shows that the investor interest Africa is seeing today is part of a structural change that is likely to be sustained through periods of economic downturn like the recent slump in commodities prices that have hit many African economies. In 2016, there was a 32 percent rise in capital investment projects in Africa.

Indeed, while aid dollars have traditionally dominated capital flows into Africa, investment is growing rapidly. As these investors tap into Africa’s potential, they are also helping to fuel its growth.

The Overseas Private Investment Corporation (OPIC) is a U.S. agency that helps businesses invest in developing markets around the world and we’ve long recognized the potential of Africa and its people. Our portfolio in Africa has grown from about $1 billion in 2002 to $7 billion today. When I travel with a team from OPIC to Ghana and West Africa this week, I’ll see the impact that investment has had, from Cameroon — where a new hospital is providing sight-saving surgery to thousands — to Togo, where a major power plant tripled electricity generation capacity. Here in Ghana, OPIC has supported investment in many sectors, from a sweeping project to introduce more advanced healthcare equipment, to a major power plant, to a mortgage company that helped simplify land registry, enabling more people to purchase homes.

These projects are all a testament to the local governments that have committed to adopting reforms to attract more investors, as well as the people of Africa, who comprise a large and growing population that are recognized around the world as a powerful force. By 2050, a full quarter of the world’s population will be Africans, most of them under the age of 30.

OPIC is proud to support investment that is having such a positive impact, but we also understand that much more must be done to create opportunity for Africa’s rapidly growing, increasingly urban population, and to connect the continent to the rest of the world.

Better supply chains will be needed to improve trade within countries and across borders. Thousands of miles of road will have to be paved. Ports will have to be modernized. More power generation capacity will have to be added. And all this will require significant resources.

In recent years we’ve seen how investment has helped transform Africa. Investors have built critical infrastructure like power plants that are not only improving the quality of life in places like Ghana but also supporting increased business activity. By strengthening telecommunications networks, they have helped foster connectivity with the rest of the world. They are providing financing to small businesses that are a key source of jobs and opportunity, and they are investing in Africa’s smallest farms, helping them improve their yields and reach larger markets. And these investors will be essential to Africa’s next wave of growth. As long as Africa continues to offer opportunities for investment, development will continue to foster growth and stability.

SOURCEModern Ghana
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