But above all, we have sought to correct a misconception prevalent among international investors – and domestic investors too – that Africa is a high-risk investment. To stimulate a growth in domestic private investment, we have devised a concerted campaign to develop innovative new financial vehicles and blended finance instruments. Over the last ten years, FSD Africa has pro-actively worked with governments, regulators, market authorities and financial institutions to address this shortfall, and to create the environment necessary for private capital involvement via policy changes, regulatory evolution and clear, transparent frameworks which inspire investor trust. The World Bank’s figures also indicate a worrying trend – investment in infrastructure with private sector participation in sub-Saharan Africa plummeted from US $15bn in 2012 to just $5bn in 2019. The Brookings Institution Foresight Africa notes that, “Despite two decades of solid growth, industry, tradable services and agro-industry are still a small share of African employment and output”.īut the construction and expansion of the formal sector requires significant initial capital outlays, which Africans are consistently denied: domestic private investment as of 2012 had run well below the levels necessary for rapid industrial growth- at about 11% of GDP since 1990. In order to fully deliver the economic benefits of employment, these jobs need to be formalised, delivering adequate protections and measurable contributions via tax and spending.Īuthoritative commentators have identified the need for Africa’s prosperity to be underpinned by properly invested, formal and long-term economic drivers. Indeed, a growing young population (Africa will soon take its place as the world’s most populous continent, and 40% of Africans are not yet 14 years old) creates an acute and urgent need for steady employment which facilitates aspiration. While certain African states have witnessed meteoric economic growth, progress has not been consistent or evenly distributed – by 2012, GDP in Sub-Saharan Africa had fallen to 2.7%, while double-digit inflation in Eastern Africa arising from increased food prices and higher fiscal deficits had ushered in a period of macroeconomic instability and unpredictability. This growth, whilst encouraging, hides fundamental issues, however – ones which we are determined to address. In 2023, as we look back on ten years, Africa is still struggling to cope with the wake of another crisis – a global pandemic which saw the precariousness of global health inequalities laid bare, compounded by a war in Europe which has disrupted the continent’s access to vital commodities.īut despite these challenges, Africa’s growth has been meteoric – only two years after the 2008 crash sub-Saharan Africa constituted among the fastest growing regions on earth, recording a GDP growth of 6%, and according to the World Bank the region’s emergence from the recent pandemic has seen it beat almost every economic forecast. In 2012, the newly established FSD Africa set out in a world still reeling from the cataclysm of a financial meltdown which began in the West but soon rippled beyond. The past decade has been bookended by two era-defining crises: the global financial crisis (or “Great Recession”) and Covid-19. But Africa has been starved of domestic private investment, and this shortfall will only become more acute as the continent seeks to equip itself to compete as a hub for sustainable, green economic development which will enrich equitably and liberate ordinary Africans from being hostages to the ravages of climate change. Private financing – matched with state encouragement – underpins any significant infrastructural improvement, wherever you look in the world. During the last decade, the region’s evolving dynamics have led us to the adoption of a key principle: promoting financial inclusion cannot be effective without addressing the systemic, structural problems in these countries’ financial systems. Distilling from this tangled nexus of economic, political, and cultural challenges a single issue is made all the more difficult because of the rate at which Africa is changing. No region’s challenges are simple – let alone a continent as diverse and varied as Africa.
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