Africa needs to make its business environment attractive to draw investors and ensure strong growth, said panelists in a session called "Harnessing the Investment Climate" at the 49th Annual Meetings of the African Development Bank (AfDB) in Kigali.
"A healthier business climate is indispensable for investors to agree to come to a country," stressed Benjamin Mkapa, former President of the United Republic of Tanzania and Co-Director of the Investment Climate Facility for Africa (ICF), during the meeting of experts on Thursday, May 22.
And Mkapa listed the pitfalls very often faced by investors in Africa – namely difficulties in accessing land, unfavourable taxation regimes, a glaring absence of infrastructure and energy, and a weakness of trade.
He particularly regretted the fact that few African countries contributed to the Investment Climate Facility. "And yet,” he said, "the Facility currently has 66 reform projects for which finance is being sought." The Facility is partially funded by contributions from foreign multinationals and some European countries.
"The benefits of the Facility are significant," said Mkapa, explaining that, "investors' reluctance is sometimes based not on their greed but on a lack of confidence."
As for the Egyptian Minister of Foreign Affairs, Nabil Elarby, he focused on the case of his country, which has been involved in a political transition for three years. "We are currently committed to the path of political stability. The next step will be to re-establish economic stability", said Elarby, before revealing that his country has a deficit of 40% of gross domestic product (GDP). The goal the Egyptian Government has set itself is to bring this deficit down to 10% by June 2015.
To this end, the Egyptian authorities have committed to undertake fiscal reforms and to invest in energy – "two necessary prerequisites for the development of more stable financial policies.”
With great potential (forests, minerals, rivers, etc.) the Congo offers almost every attraction to investors. Nonetheless, as Congolese Minister for Small and Medium Enterprises (SME) Yvonne Adelaïde Mougany said, obstacles remain to the improvement of the business climate in the Congo. Conscious of these shortcomings, the Government is developing an investment code.
Panellists were unanimous in recognising that the business climate in Africa has improved. "It took time for people to realise that the private sector could develop alongside the public sector," said Mo Ibrahim, President of the Foundation that bears his name.
According to Ibrahim, one of the major handicaps is the negative image of Africa conveyed on the financial markets. "Many investors still believe that Africa is led by dictators. For this reason work must be done beyond the continent to make Africa more attractive to potential investors." Mo Ibrahim also accused foreign media of conveying these false images of Africa.