The President of the African Development Bank (AfDB), Dr. Akinwumi Adesina, has dismissed the notion of Africa being a risky environment for investors. According to him, data has shown that Africa has a lesser default rate compared to more developed continents.
The AfDB boss spoke yesterday at the ongoing Africa Investment Forum in South Africa. Adesina predicted an average growth rate of about three percent for the continent, adding that about 20 countries on the continent could even achieve an average of five percent Gross Domestic Product (GDP) growth rate.
“And guess what, six of the 10 fastest growing economies in the world are in Africa,” he stressed.
Adesina added that foreign direct investment in Africa increased in 2018 by 11 percent, compared to four percent in Asia and a decline of 13 percent globally.
“So, Africa is doing well on investments, but it still needs to do a lot more and Africa is ready to absorb a lot more of those investments.“The risk perceptions of the continent while high are often exaggerated and they do not match what the data show on risk and return performance on investment,” he stated.
He compared Africa’s default rate with other continents, saying, “consider for a moment, the Moody’s Investment Services on project loans and finance between 1983 and 2016; it shows that Africa has one of the lowest project default rates in the world, much lower than Latin America, Asia, Eastern Europe, North America and the Oceania.
“Yet investments are tilted to regions with much higher default rates. So, it is not about real risks, it is all about perceived risks.
“Last year, when we all gathered here at the inaugural Africa Investment Forum, we secured investment for deals valued at $38.7 billion in less than 72 hours. A lot of progress is being made on this investment with a highly dedicated team working around the clock to accelerate financial closure of transactions.”
Adesina added: “Let me cite a few examples: The Africa infrastructure investment fund for investment in agriculture was presented here last year; it sought $500 million and $500 million equity has been closed – promise made, promise kept.
“The Africa Guarantee Fund for investments sought $175 million to support small and medium size businesses and enterprises and the equity transaction has been finically closed – promise made, promise kept.
“Here in South Africa, the beef agro-processing project, we sought $350 million and that has also been financially closed. The Alitheia identity fund, a private equity fund specifically for women businesses put up right here for $72 million has been financially closed – promise made, promise kept,” he added.
In his address, the President of South Africa, Mr. Cyril Ramaphosa, debunked the allegation that his country is prone to xenophobic attacks on foreigners and urged foreign investors to take advantage of the huge investment opportunities in the continent.
Ramaphosa said the forum provided a unique opportunity for deal-making. “Last year, there were quite a number of investors who came from 55 countries, the forum was instrumental in mobilizing funding for initiatives as diverse and exponentially impactful as the Accra Skytrain, the Kigali innovation city, the first road/rail/bridge project linking Kinshasa and Roseville and the $320 million Africa infrastructure investment fund.
“This is an indication of the breadth of investment opportunities that do exist in our continent in areas such as mining, oil and gas, infrastructure, agricultural production, manufacturing, renewable energy and a range of other profitable sectors.
“Much of the economic progress over the last few years has been made possible by developments in the area we call the political sphere.
“This has been a good year for the consolidation of democracy across our continent. National, presidential and parliamentary elections have been held in a number of countries notably in Botswana, Malawi, Mauritania, Namibia, Nigeria, Mozambique and right here in South Africa.
“Global investor surveys consistently highlight political stability and security as important considerations for committing capital. Every election that passes peacefully and that reflects the will of the people is another major step towards the attainment of an Africa that is at peace with itself,” he explained.
He also faulted the notion that Africa was unstable and a risky place to invest and to do business.