Five years into its operation, the Africa Investment Forum (AIF), a platform spearheaded by the Africa Development Bank (AfDB) in collaboration with seven other partners, has mobilised a staggering $177.4 billion in investment interests. The just-concluded AIF Market Days held in Marrakesh, Morocco, saw investors committing $34.8 billion to deals across agribusinesses, renewable energy, creative industry, healthcare infrastructure, and sundry critical sectors across regional markets.
Dr Akinwumi Adesina, President of AfDB Group, disclosed at the closing press briefing that the deals include the financing of Mtwara-Mbamba Bay Standard Gauge railway line in Tanzania and the Mangapwani II Integrated Port in Zanzibar.
The Marrakesh meeting, like the previous edition held in Abidjan, was attended by dozens of heads of state, hundreds of investors, several fund managers/financial brokers, and heads of development partners from across the world. It is worth noting that heads of state and prime ministers sat at the deal-making boardrooms as chief marketing officers of their respective countries. Their presence and active participation in the negotiation processes, Dr Adesina stressed, is a major assurance that most of the deals would be followed through to closure in the coming months and years.
Governments still have work to do to attract more investments
From inception, Dr Adesina said, projects valued at $11 billion have been concluded while others are at the final stage of laborious discussions.
The amount is a drop in the ocean when compared with what the continent needs to build its economy. It is a mere 6.5 per cent of the estimated $170 billion Africa needs to spend yearly to overhaul its critical infrastructure to compete with other regions by 2050, according to AfDB estimation.
To secure such funding, studies by Mckinsey and others have highlighted the need for governments and multilateral development institutions to expand the flow of private-sector financing into more commercially viable assets, reallocate government financing towards commercially viable assets, increase partnership multilateral and national financial institution collaboration and reform infrastructure financing space. Hence, they consider the role of national governments as the most important factor in opening up the investment space.
At the presidential panel during the AIF Market Days, the political leaders admitted governments could do more to address the challenges that have stalled the growth of the economy. For Somali President, Hassan Sheikh Mohamud, African countries would need to be more liberal and tolerant of one another to attract investment. Hence he called for the “removal of obstacles to trade and investment” while calling for more connected African countries.
A more connected Africa
Issues around connectivity, thus, became talking points. The 2022 Africa Visa Openness Index suggests that there has been remarkable progress in freedom of travel policies in the past six years. The report said 93 per cent of African countries have maintained or improved their score relative to 2021. Yet, stakeholders said that the countries would need to do more to be more attractive to investors within and elsewhere. Ironically, the Moroccan meeting provided a case study in discussing the connectivity challenge as participants shared experiences of how they had to fly to Europe before reaching the North African country.
Whereas some panelists were fixated on what the continent could do to explore the huge opportunity in the global market to grow its economy, President Julius Maada Bio of Sierra Leone was disposed to a more inward-looking approach to addressing the economic challenges and creating sustainable jobs to prevent a demographic related crisis. He aligned with the theme of the summit – ‘Unlocking Africa’s Value Chains’, saying it is time to add value to commodities produced in the continent to stop young Africans from chasing jobs ‘exported’ by their countries to Europe and America.
“Hundreds of Africans die every year in the Mediterranean Sea while they risk their lives trying to cross to Europe. To stop this, we must stop depending on commodities and diversify our economies. We need to add value to stop youths from dying chasing jobs created by those who process our exported commodities. We need to pursue demographic dividends – to make our youths a blessing instead of a curse,” Bio charged his colleagues. To achieve economic diversification, he called for political stability in the continent as well as deliberate policies to make the investment market-friendly.
In her intervention, Tanzanian President, Samia Suluhu Hassan, African countries would need to invest in the education sector to raise the human capacity index and build the capacity for building a resilient economy. She described the human capacity index as “extremely low”, saying reversing the trajectory should top efforts to unlock the potential of the continent.
Africa must act with a sense of urgency
The Rwandan Prime, Édouard Ngirente, differed from other leaders not based on the content of discussions but the speed of execution. He admitted that a more connected market, better policy environment, and investment facilitation were important but warned that “we need to be practical to avoid losing time”.
Every year since 2018, AIF brings public officials and private sector players under a single roof to discuss the obstacles facing the continent and curate life-changing deals for investing public.
Last year, for instance, the Abidjan-Lagos Highway, a key priority project under the Programme for Infrastructure Development in Africa (PIDA), generated $15.5 billion in investment interest has only scaled through the preparation phase with $45 million mobilised for the purpose, according to the Commissioner for Infrastructure, Energy and Digitalisation, Economic Community of West African States (ECOWAS), Sédiko Douka.
That explains the irony of investment interest, which is nothing near finality but only an expression of interest and an entry point into a long discussion in the investment decision-making process. It also explains the frustration of the high drop-off rate of African projects at the feasibility stage, which some reports estimate at 80 per cent.
Perhaps, the major question is how the long, tiring journey from project conception to execution could narrow to achieve more from the yearly AIF.