African investment received a shot in the arm with the launch of the Investment Climate Facility (ICF) for Africa, at the World Economic Forum in Cape Town recently.
The forum also heard South African President Thabo Mbeki extend his theme of the ”Age of Hope”, first mooted in this year’s state of the nation address, to the rest of the continent as it enjoys unprecedented growth driven by high commodity prices.
With initial funding of $80-million, the ICF is a public-private partnership designed to improve Africa’s status as an investment destination. The facility is designed to help drive tax and customs reform, reduce red tape in the establishment of businesses and improve investment infrastructure in a range of African countries. It is aimed at the countries that have signed up to the African Peer Review Mechanism.
Asked whether countries like Zimbabwe will benefit, IFC co- chairperson and Reuters chairperson Niall Fitzgerald pointed out that the country would have to be willing to undergo peer review, suggesting that it will need radical reform of its economy. The ICF’s other chair- person is former Tanzanian president Benjamin Mukapa.
Over its seven-year lifespan — it expires in 2012 — the ICF aims to raise $550-million to help sustain levels of economic growth not seen in 30 years on the continent. The facility is funded by the British and Dutch governments, among others, as well as by Anglo-American, Shell, Unilever and SABMiller.
The forum’s Global Health Initiative launched a white paper calling on the private sector to help drive healthcare system reform in sub-Saharan Africa, the only region expected to fail to meet its health-related Millennium Development Goals.
Africa’s economic boom is inextricably tied to China’s and India’s demand for commodities and the twin giants’ emergence as an economic force inevitably came into focus. The forum was presented with two scenarios that relating to Chinese growth. In the first, China’s growth creates a climate of protectionism that hinders trade. A significant portion, roughly half the delegates, believed this to be likely. In the second, China’s growth is stunted by a lack of structural reforms and because it is spread unevenly. Although there is evidence of this scenario unfolding, delegates thought it less likely than the first. They anticipate that the commodities boom will drive Africa’s fortunes for at least the next decade.
The forum takes place against a backdrop of unprecedented optimism. A poll by Gallup International found that Africans are highly optimistic about the continent’s outlook, with Nigeria and South Africa, the continent’s largest economies, recording levels of 60% positive outlook.