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Private sector’s contribution to Africa’s growth notable, but more should be done
The 5th 2016 Korea-Africa Economic Cooperation (KOAFEC) Ministerial Conference ended with strong calls for enhanced private sector involvement to achieve sustainable development in Africa.
At the KOAFEC Public-Private Partnership Forum, the African Development Bank emphasised that private sector contribution was necessary especially in the face of Sustainable Development Goals, which require massive investments for their achievement by 2030.
Charles Boamah, AfDB’s Finance Vice-President, highlighted other reasons for the much-needed private sector investments. “ODA [Overseas Development Assistance] has remained stagnant, even falling at a time when the upfront investment needs are skyrocketing and the social imperatives are urgent and cannot be postponed,” he noted.
“At the same time, long-term savings (pension funds, sovereign wealth funds, etc.) are crying for yield. Indeed, there is a growing pension crisis, with pension assets attracting incredibly low returns at a time when their liabilities are shooting up,” Boamah said.
The Vice-President pointed out that these scenarios provide an opportunity to further boost growth through investments in infrastructure and other sectors / assets. “There is a social need, there is an economic case and there appear to be sources of capital keen to participate if properly incentivized,” he underscored.
For PPPs to thrive, governments were urged to create enabling environments for doing business. These include establishing legal and regulatory frameworks targeting PPPs, according to Ajedra Gabriel Gadison Aridru, State Minister, Ministry of Finance, Planning and Economic Development, in Uganda. “In Uganda, although there have been PPPs, there was no legal framework until last year when a bill was passed,” he said. The PPP Act 2015 spells out the engagement of private partners in PPPs. It also regulates the roles and responsibilities of government bodies during the development and implementation of PPP projects.
In a joint declaration adopted by the Korean Ministry of Strategy and Finance (MOSF), the African Development Bank (AfDB), Korea Eximbank (KEXIM) and ministers of Finance from AfDB member states during the 2016 KOAFEC Ministerial Conference, the parties recognised that agriculture was a key sector for investment. They noted the significant impact of agricultural transformation on Africa’s job creation and income levels. They called for stronger mutual partnership between Korea and Africa to meet the challenges in Africa’s agricultural sector. “Korea’s development experience can contribute to Africa’s economic transformation, addressing income inequality and improving people’s livelihood,” read the declaration in part.
Korea, which was once at the same level with Sub-Saharan Africa, has grown to be the 11th largest economy in the world. During KOAFEC, the country announced that it would increase its financial package to US $10 billion in support of Africa’s development.
The parties lauded AfDB’s top high priorities (High 5s), noting that they were aligned with KOAFEC’s priorities as well as those of their country plans. Reforming agriculture is a cross cutting top agenda, as demonstrated by this year’s KOAFEC theme: “Transforming Africa’s Agriculture through Industrialization and Inclusive Finance”.
Over 500 participants including Ministers of Finance and Agriculture, representing AfDB’s member countries, attended the event in addition to private-sector leaders, pan-African institutions, regional economic communities, academia, among others.
The KOAFEC Ministerial Conference is jointly hosted by the AfDB, the MOSF, and KEXIM. The next KOAFEC Ministerial Conference will be held in Busan, Korea, in 2018. The Conference will be held alongside the AfDB Group Annual Meetings, which will be hosted by the Government of Korea.