In the midst of the general hand-wringing at the annual International Monetary Fund (IMF)/World Bank meetings in Washington, DC, in October, there was a palpable optimism from many countries in sub-Saharan Africa, a region where it is sometimes in short supply.

“Currently Africa is one of the very few places where economic growth is still robust,” Madagascar’s minister of economy, Ivohasina Fizara Razafimahefa, tells fDi.

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“Facing a background of financial crisis, Africa is offering one of the few opportunities in the world where return on investment is still high and where the risk of investment is relatively small. So the message we want to convey is: we believe we can turn this threat of crisis into an opportunity for Africa, and we would like Africa to bring solutions. And Africa can do that – it can bring solutions to this current crisis, instead of always being considered as a problem to the world economy.

“The time has come for Africa to be a part of the solution,” Mr Razafimahefa continues. “We can do that in terms of giving the opportunity for investment to come in, both public and private.”

Land available

In the case of Madagascar, investment is sought in infrastructure, industry, tourism, mining and agriculture among other sectors – “in any area where we can help”, says the minister. “Now we are facing the food crisis. Madagascar can have a lot to offer on this: we have land, we are using less than 10% of arable land in Madagascar. The big foreign investors can come in, work together with us. They will get good return on investment and we will get food for the population. Together we can be part of the solution for the entire world for the food crisis.”

This echoes the sentiments of other African finance ministers interviewed at the IMF/World Bank meetings: that the crisis spreading throughout the developed countries perhaps presents an opportunity for some of the least developed economies. This is because they are removed from the stricken Western financial system and positioned to offer a very low-cost option and huge untapped markets at a time when companies are struggling with their margins. Added to that are the region’s unexploited agricultural capacity and infrastructure development opportunities.

Infrastructure is a top priority for African governments. It is an opening for foreign partners to get involved in Africa’s development and at the same time is one of the continent’s main hindrances to foreign investment. In order to attract more – and better – investment, African countries need substantial improvements in and expansion of road, rail, air and water links as well as telecoms connections.

Infrastructure integral

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“Well-developed infrastructure is obviously an integral part to attracting FDI because if we don’t have that, we’re not going to be able to attract investment,” says Ali Mahaman Lamine Zeine, the minister of finance and economy of Niger. He believes the country has much to offer if the infrastructure ingredient can be found. “Niger is a country that is peaceful. It’s stable, it’s ready to receive investors, it can offer the right environment in every sense of the word.”

 

Infrastructure forms a core part of Cameroon’s development ambitions as well. “We are now working on an economic development plan, which would be available early next year, and in this context we are open to any investment, including in infrastructure,” says minister of finance Essimi Menye.

The Chinese factor

“Europeans are supporting our country, for instance, by building roads, but this support does not cover the huge needs we have,” says Mr Menye. “We will need to build more than 4000 kilometres of roads so that we will be able to produce and distribute goods – you cannot produce anything if you cannot move goods from place to place. China is a country that is ready to do a lot of things in many places, in terms of investing in infrastructure, so we will be taking advantage of this situation. However, we need to make sure the government and the population will not lose out.”

Chad’s minister of finance is equally focused on infrastructure, of various kinds, and keen to attract investment to support development and expand upon progress already made. “Transport infrastructure and telecoms are still sectors that need to attract more FDI,” says Gata Ngoulou.

“The road network has grown threefold in the past six years. There are some projects under way to further develop the energy sector to make sure that everybody has access to electricity. There is also a special installation of fiber optics which will help to enhance the communication sector.”

In formerly war-torn but now peaceful Sierra Leone, reconstruction needs are large, and there is a clear role for foreign capital and expertise to play. But in a way it is a Catch-22 situation, as finance minister David Carew acknowledges. “It’s the chicken and egg – which one comes first?” he says of reconstruction and FDI.

Commitments and responsibilities

“We know the effect FDI will have on the economy in terms of revenue mobilisation, in terms of reconstruction, in terms of employment, etc. but we have as a country commitments and responsibilities,” says Mr Carew. “We need to compete first of all with other countries in the sub-region for investment, and the question we always ask ourselves, if somebody has a million dollars, why should the person take it to Sierra Leone and why not to Ghana or any other country? We need to discuss the opportunities that are available and market those well. We need to create an environment for business.”

That environment requires adequate energy infrastructure, for a start. “We are aware of the importance of energy in business,” Mr Carew says. “Our energy production had reduced significantly because we did not maintain the facilities there. We have now with a number of other partners developed hydro potential and we are looking at private sector involvement in our infrastructure.

“We recognise our capacity in terms of availability of funds, which are not there, and we are encouraging the private sector to partner with us to build up our infrastructure, focusing on those which will support business. That includes telecoms, the road network, electricity. These are the big ones, and when we do that, other things seem to fall into place automatically.”

Plans are proceeding apace and will, once they come to fruition, have an impact on FDI. “We are building our power capability. For some of these industries that would do second-line processing of not only food items but of minerals. They need substantial quantities of electricity production and we are working on that as well. When we are able to produce enough electricity to support industries, then we would go to level two production,” says Mr Carew.