Africa, "a continent that has 60 percent of the world’s arable land and abundant and youthful manpower", is in need of investment to unlock its potential; it is time for investors to develop a more realistic - and more positive - perception of the continent, Akinwumi Adesina, president of the African Development Bank Group (AfDB), said.
“Africa is not as risky as you think. Perception is not the same as reality,” the AfDB President declared.
According to Adesina, the continent suffers from a prejudiced perception of its investment climate. He quoted a Moody’s Analytics report, noting that Africa has the lowest default rate on infrastructure projects in the world (5.5 percent against Western Europe with 5.9 percent, North America with 7.6 percent, Eastern Europe with 8.6 percent, Asia with 8.8 percent and Latin America at 12.9 percent).
Explaining why the region is such a good destination for investment, the AfDB President pointed to Africa's recovery from the COVID-19 crisis and what changes in foreign direct investment (FDI) showed. Because of the pandemic, the index fell from $47Bln in 2019 to $40Bln in 2020. A year later, however, FDI rose to $83Bln, illustrating how resilient the continent's economy is.
He also emphasized the positive role of the African Continental Free Trade Area, which was established in 2018.
“The African Continental Free Trade Area is the largest free-trade zone in the world, connecting economies worth $3.3 trillion,” he said.
The participants of the forum discussed a number of projects that "range from renewable energy hydropower, gas infrastructure, railways, road, and water transport".
Adesina's remarks are part of an ongoing discussion about the effects of inadequate financial policies caused by a distorted image of Africa as an investment destination.
Lately, Mo Ibrahim, a Sudanese-British billionaire drew attention to the case of Ghana.
The businessman stressed that the West-African country's debt-to-GDP ratio of 83.5 percent is lower than Greece’s (206.7 percent) and Portugal’s (130.8 percent). However, regardless of the data, Ghana was placed below the European countries in the 2021 Moody's rating, and as a consequence charged an interest rate of 9 percent on 10-year bonds (with 1.3 percent and 0.4 percent for Greece and Portugal respectively).
Africa's pursuit of social and economic stability has recently faced severe new challenges, including the impact of climate change, COVID-19 and global energy crisis. Many Africans tend to accuse the West of sacrificing Africa's security in preference of its own interests.