A Decade of NEPAD - Economic Commission for Africa - uneca

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40 A Decade of NEPAD: Deepening African Private Sector and Civil Society Ownership and Partnership ӹ Promote intra-African trade with the aim of sourcing within Africa, imports formerly sourced from other parts of the world; ӹ Creating marketing mechanisms and institutions to develop marketing strategies for African products; ӹ Publicize African exporting and importing companies and their products, through trade fairs . . . Two further private sector related objectives included increasing domestic resource mobilisation and private capital flows. ӹ Increasing Domestic Resource Mobilisation To achieve higher levels of growth and more effective poverty reduction, Africa needs to mobilise additional resources, both domestic and foreign. Domestic resources include national savings by firms and households, which need to be substantially increased. In addition, more effective tax collection is needed to increase public resources, as well as the rationalising of government expenditures. A significant proportion of their domestic savings is lost to African countries as a result of capital flight. This can only be reversed if African economies become attractive locations for residents to hold their wealth. Therefore, there is also an urgent need to create conditions that promote private sector investments by both domestic and foreign investors. ӹ The Private Capital Flows NEPAD seeks to increase private capital flows to Africa, as an essential component of a sustainable long-term approach to filing the resource gap [of roughly US$64 billion]. The first priority is to address investor’s perception of Africa as a “high risk” continent, especially with regard to security of property rights, regulatory framework and markets. Several key elements of the New Partnership for Africa’s Development will help lower these risks gradually, and include initiatives relating to peace and security, political and economic governance, infrastructure and poverty reduction. Interim risk mitigation measures will be put in place, including credit guarantee schemes and the strong regulatory and legislative frameworks. The next priority is the implementation of a Public-Private sector partnership (PPP) capacity building programme through the African Development Bank and other regional development institutions to assist national and sub-national governments in restructuring and regulating transactions in the provision of infrastructural and social services. The third priority is to promote the deepening of financial markets within countries, as well as cross-border harmonisation and integration, via a Financial Market Integration Task Force. Although presented “for illustrative purposes only”, it is relevant that of the three priority projects that were presented to represent what was needed to strengthen “country and regional development programmes and kick-start the regeneration of the continent” (along with agriculture and the promotion of infrastructure and regional integration) the establishment of a continent wide initiative to establish national business incubators (in support of the African private sector) that would draw on international experience and best practice-tailored to African needs and conditions, was also put forth. After ten years of implementation there has been progress in a number of the areas put forth as objectives of the NE- PAD mission vis-à-vis the private sector, although most noticeably these gains have been in the area of macroeconomic environment improvement. And while it might be slightly disingenuous to attribute all of these gains exclusively to NEPAD, it is irrefutable that over this period, particularly among Africa’s traditional international donor partners, the emergence of NEPAD as the AU programme for economic growth and development toward the achievement of the MDGs has helped focus their overseas donor assistance in a more harmonised manner. The rapid economic growth that has been present for much of the period during which NEPAD has existed in part is the result of a macro-economic reform trajectory begun by African states in the 1980s. Inflation management, improved monetary policy, strengthened rule of law, protection of property rights, reduction in the cost of doing business, technology adoption, innovation and capital accumulation, democratic elections, debt reduction and value added export promotion are some of the initiatives that have characterised the types of public sector reforms undertaken. In addition to the economic reforms, other important factors which buoyed Africa’s economies included higher international commodity prices, political stability and a rapid reduction in conflict, and increased government spending. Debt relief, in particular, under the World Bank’s Heavily Indebted Poor Countries (HIPC) programme
GDP Growth Rate (2004-2011) and the IMF’s Multilateral Debt Relief Initiative (MDRI) also helped African nations to reallocate funding to more development fostering initiatives as external debt declined as a percentage of GDP from an average of 62.4% for 1998- 2001 to 47.9% for 2000-2005 and down to 23.1% in 2007. Thus, between 1998 and 2007, these factors helped the continent record average growth rates of 4.3%, which although lower than Asian growth rates were higher than growth rates in Latin America and the Caribbean. Indicative of Africa’s overall economic resilience and growing internal economic drivers is the fact that although 2009 is expected to be a below par GDP growth year, projections are that the continent’s 2011 GDP rates rebounded to 5%. In response to Africa’s strong economic growth, the continent has also increasingly attracted foreign direct investment and private capital. Between 2002 and 2007 foreign direct investment (FDI) into Africa rose strongly from less 4. NEPAD and the African Private Sector Today A Decade of NEPAD Country 2004 2005 2006 2007 2008 2009 2010 2011 Nigeria 10.6 5.4 6.2 7.0 6.0 7.0 7.4 7.4 Benin 3.0 2.9 3.8 4.6 5.0 2.5 2.8 3.6 Burkina Faso 4.5 8.7 5.5 3.6 5.2 3.2 4.4 4.7 Cote D’Ivoire 1.6 1.9 0.7 1.6 2.3 3.8 3.0 4.0 Gambia 7.0 0.3 3.4 6.0 6.3 5.6 5.0 5.4 Ghana 5.6 5.9 6.4 5.7 7.2 4.1 5.0 9.9 Guinea 2.3 3.0 2.5 1.8 4.9 -0.3 3.0 3.9 Guinea-Bissau 3.1 5.0 2.2 0.2 3.6 3.0 3.5 4.3 Liberia 2.6 5.3 7.8 9.4 7.1 4.6 6.3 9.5 Mali 2.3 6.1 5.3 4.3 5.0 4.4 5.1 5.4 Niger -0.8 8.4 5.8 3.4 8.7 -1.2 3.5 5.2 Sierra Leone 6.6 5.7 6.7 6.0 5.5 3.2 4.5 5.2 Togo 2.3 1.2 3.7 1.9 2.2 3.1 3.3 3.5 Source: ECA (2012), Economic Report on Africa than US$20 billion to a record of US$53 billion. US$22.4 billion of FDI was invested by trans-national companies in North Africa and US$30.6 billion was invested in Sub- Saharan Africa. Even during the recessive period of 2008 when global FDI fell by 20%, FDI in Africa remained resilient, rising by 16.8% to US$61.9 billion. Mergers and acquisitions in Africa also continued to rise, growing by 157% between 2007 and 2008 to US$26 billion. Furthermore, the rate on return on investment in Africa has been increasing annually since 2004 registering 12.1% in 2007, giving the continent the highest global investment rate of return among developing nations. Most of the investment attracted to Africa, however, has remained focused on countries that have significant natural mineral and petroleum resources. This has skewed foreign direct investment to a relatively narrow group of countries and also has impacted upon which regions attract the lion’s share of FDI: 41
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Page 71 and 72: NEPAD and the African Civil Society
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Page 81 and 82: Key Stages Key Actors Sensitization
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Page 85 and 86: NEPAD African Private Sector and CS
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90 A Decade of NEPAD: Deepening Afr
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92 A Decade of NEPAD: Deepening Afr
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Conclusion The African Union’s NE
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References AfDB (2009) Africa’s D
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Secretariat and the Secretariat of
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