This could be a game changer for financing Africa’s transformation

It is estimated that around $170 billion is required per annum to finance the African Development Bank’s High Five Agenda. Moreover, Africa’s annual infrastructure gap is estimated anywhere between $68 – $130 billion a year.

It is estimated that around $170 billion is required per annum to finance the African Development Bank’s High Five Agenda. Moreover, Africa’s annual infrastructure gap is estimated anywhere between $68 – $130 billion a year.

When placed within the context of the continent’s growing population, youth bulge and economic potential, the need for increased private sector involvement is immediate. Decades of public spending, for instance on infrastructure has not been sufficient to adequately address the gap in the quantity or quality of much-needed infrastructure across the continent.

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Africa does need a pool of investible funds that are accessible and long-tenured to finance its transformation. There is, therefore, an obvious need for Africa to significantly formalize its economies, create businesses that operate as corporate entities, and separately from their owners, as well as the right policy, regulatory and economic environments that are attractive to long term capital. Together with effective institutions for capital intermediation and appropriate investment market places, connecting providers and users of capital, such as the Africa Investment Forum, Africa can accelerate its economic and social transformation.

Across regions and in specific countries, there are several silver linings in the cloud. Much of it thanks to the active engagement of the private sector, and this is increasingly through financial markets.  This year, we witnessed the Initial Public Offer (IPO) and listing on the Johannesburg Stock Exchange of Vivo Energy’s, that raised over $740 million, which remains the largest listing of an Africa-focused business since 2005. Moreover, one of the most talked about IPOs was the MTN Group’s Ghana offering.

As investors focus greater attention on opportunities, what is coming into sharp focus is the premium that investors and markets are placing on good governance, market depth, the rule of law, policy and regulatory environments.

Aside from South Africa whose Johannesburg Stock Exchange market capitalization is around $1.06 trillion, most African financial markets remain small.

Despite challenges, Africa’s private sector and financial markets present strong possibilities and realistic potential for bridging the financing gap critical for the continent’s economic and social transformation, and the achievement of our priorities in agriculture, regional integration, energy, industrialization, and improvement of the standards of living across the continent as well as the sustainable development goals.

The fact is, the private sector and financial market contribution in helping to close the financing gap is neither a miracle nor a mirage. It is not a miracle as it is based on unleashing the full potential of the real economy and encouraging investment. It is also not a mirage as the public and private sector must continue to work together, and through the markets and other intermediary institutions, to raise capital especially the much needed long term funding.

The Africa Investment Forum, November 7 -9, 2018, will no doubt help raise the bar when it comes to bringing together all stakeholders,  public and private, and matching investment capital with the private sector, bankable projects and the continent’s ambitious goal of reducing its multi-billion dollar financing gap,  including for infrastructure.

Source: Stella Kilonzo, Senior Director, Africa Investment Forum, African Development Bank

 

Africa Promises Good Investment Opportunity Says Elumelu at WEF

Mr. Tony Elumelu, group chairman, United Bank for Africa (UBA) and one of Africa’s top businessman, has stressed the need to change the African narrative while concentrating on the myriad of opportunities inherent in the continent, stating that its economic transformation and stimulation should be the focus of all governments and global institutions.

This, he said, is paramount if the continent is to take its rightful position as a strong regional player in the international community, owing to its numerous investment opportunities.

Elumelu, who is the Founder of the Tony Elumelu Foundation, said the time had come for governments on the continent to put things in place to ensure that the continent which has great potential, lives up to it; adding that already, there are signals of the greatness all around.

Speaking during Richard Quest’s programme on CNN  aired on the sideline of the ongoing World Economic Forum in Davos, Switzerland on Thursday, he said; “the time has come for us to prioritise our young ones, who are the future of this great continent. These are the men and women who are energetic in Africa and who can perform wonders if the enabling environment is there.

“We need to get it right with infrastructure in Africa and with the macro-economic policies and environment. And the good thing is that things are gradually falling in place. I think Africa promises good investment opportunities, the problem has always been creating the right environment for it, and this should be our major focus.” Elumelu stressed.

He added that in Zimbabwe, for instance, there have been recent concerted efforts by the government and the people to change the narrative, adding that “I am optimistic about what is happening in Africa right now, because our leaders are getting it right and in fact what has happened in Zimbabwe is also an indicator of great things to come. The fact that they on their own decided to sort things out the way they did, is a new kind of democracy that the world needs to learn from. “There is so much private global capital looking for the right destination, they can go to Zimbabwe as in other African nations, once the right environment is put in place.”

READ: 13 Reasons Why you Should Exhibit at the 12th Abuja International Housing & Construction Show 2018

While pointing out that the blame game which previously obtained in the continent should be done away with, Elumelu called for increasing support from the private sector as well as key stakeholders to make Africa and African self-sufficient.

Throwing more light on this, he said; “We can’t keep talking about missed opportunities. What I keep saying to people is to put an end to the blame game. Let’s begin to fix what needs fixing and get things right. Our government should get it right, the private sector should come forward and we need to support the young African entrepreneurs; create economic hope and opportunities for them.  “We need to think of how to engage Africa in the 21st century because it is no longer about giving grants and aid to Africa, it is more about engaging them in a way that creates self-sufficiency; independence; and reduces the perpetual syndrome of dependence.

Continuing, he said “There is promise; it is getting better because the way this year has started in Nigeria for instance, we have seen market indicators showing good promise, so we are optimistic that it will be better year. The Key is to prioritise things that are important to us to help the continent to grow.”

– Nigeria Communications Week

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