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African Development Bank (AfDB) President Akinwumi Adesina and World Bank President Jim Yong Kim, leading two development institutions at the Sixth Tokyo International Conference on African Development (TICAD VI) in Nairobi on Friday, started a big push to enable African states to attract foreign capital.
President Adesina told a high-level gathering of world leaders and the business community from both Africa and Japan the subject of discussion at the sixth TICAD summit in Nairobi were “critically important” for Africa’s private sector to drive economic growth across in the continent.
President of the AfDB regretted the recent signs showed Africa’s growth towards industrialisation was rapidly drawing backwards, but urgent steps were required to double the economic growth rate and the continent’s Gross Domestic Product (GDP) in the next 10 years to address poverty.
“The subject of discussion is critically important for Africa. The private sector in Africa is responsible for 5 percent of the economic growth in Africa in the past 10 years,” Adesina said during presentation made at a Presidential roundtable on the “Role of Private Sector in Africa’s Economic Transformation”.
The World Bank convened the session to discuss ways of transforming the African economies.
World Bank President Jim Kim said the bank was prepared to support foreign investors to engage in Africa by providing them with the financial backing required to keep their investments safe from political risk.
“We have tools to encourage you to invest,” the World Bank President said, talking about measures aimed at providing investors with guarantees to shield their financial capital from erosion as a result of policies adopted by the states in which they invest, which might lead to losses.
Amongst the issues raised by Japanese investors attending the TICAD summit was the difficulty in recouping investments into sectors like water, which are managed mostly by local authorities. This was seen to be due to the fact that local governments were not always able to collect back the revenues to pay for the cost of investment.
In some cases, investments were said to be left to accumulate losses after initial capital injection as investors such as those engaged in the power projects wait for the governments to put in place the right policies.
Discussing the role of the private sector in delivering economic transformation through diversification and industrialisation, President Adesina regretted the lack of coherent investment policies. He said this had pushed Africa onto a path of unpredictable industrialisation growth.
“There is no doubt the African economies are resilient. Africa needs investors. What Africa needs is investment,” Adesina told the audience, which included representatives from major industrial corporations and banks, and leading African entrepreneurs investing in diverse fields across Africa.
To reverse the negative industrialisation growth trend, the AfDB announced a US $125-million facility to provide credit to small and medium entreprises (SMEs) operating in Africa. The new fund enables the smaller firms to access US $1 million to US $10 million credit for business expansion.
“The size of the African manufacturing sector is on the decline from 12 percent of the GDP in 1980s to 10 percent today. Africa is de-industrialising. We must work to double our GDP in 10 years,” Adesina warned.
Speaking during the event, President Uhuru Kenyatta of Kenya said all efforts have been put in place by African investors to attract foreign capital.
The World Bank President pledged his support towards efforts to attract investors to Africa. President Kenyatta said the case of investments in Africa was well-known to Africa’s international friends and there was no need to re-emphasise the need for investments into Africa.