All segments of our society do care about growth and are engaged on development, given that broad based economic growth and an increasing influx of resources, well applied, is essential to enable the African continent to participate in the world economy and improve living standards.
Africa has shown strong economic growth in recent years, having achieved a rate of 5.8% in 2007. This solid performance has been driven, essentially, by continuing consolidation of political stability and macroeconomic management; greater commitment to implementing economic and financial reforms, leading to improvements in the business and investments climate; increasing oil production in some oil-producing countries; reduced external debt; and, increasing aid and private capital flows.
In spite of this progress, growth continues insufficient to achieve the Millennium Development Goals. The great challenge is to sustain, and increase, this growth, and to ensure it is sustainable, broad based and pro-poor. Moreover, growth continues to be limited by the absence of adequate infrastructure, especially roads and bridges, and energy supply, which increases production costs and harms international competitiveness. Additionally, the impact of external shocks, especially the continued high price of oil, climatic changes and the recent historically high food prices, are factors that risk undermining development efforts in Africa.
Africa’s ability to maintain and accelerate growth will depend on its efforts to diversify sources of growth and its success in mobilizing internal and external resources to stimulate internal demand and investment. We are aware that each type of financial flow has an important role to play in this process, and that all of us, African Governments, the International community, have an important role to play in stimulating and encouraging them. Recent data shows that Africa is a region of the world that receives more official development assistance than foreign direct investment.
Poverty reduction in Africa, in the medium and long term, requires the attraction of private investment flows. These have the potential to stimulate sustainable economic growth, job creation, technology and know-how transfer, new businesses and economic activities, including agro-industries, and contributing to the resources of the State through payment of taxes, increasing internally-generated resources.
The business environment in Africa has been improving, as demonstrated by the latest World Bank “Doing Business” report. Mozambique, for example, is among the best classified countries in Sub-saharan Africa, having risen 6 places to a rank of 134 out of 175 countries worldwide. Africa has also seen in most part a consolidation of democracy and good governance, and a decline in armed conflicts. The people are increasingly knowledgeable, and demanding, of their rights. National and foreign businesses also demand that governments implement reforms favourable to the business community. Reforms are under way in a majority of countries, and there are an increasing number of forums for consultation and participative, inclusive dialogue.
Africa is also embarking on a process of regional integration, including simplification of procedures and harmonization of investment and customs regimes. Beyond the reforms, Africa possesses enourmous potential in natural resources, land, water, flora and human capita (labour). Extensive areas of the African continent could be used more effectively through a more modern, mechanized form of agriculture, which could contribute, in part, to alleviate the effects of the high food prices that currently affects the whole world.
All these conditions, on top of an improving business climate, create a unique opportunity for investors to continue and accelerate private investment in Africa. One increasingly common and attractive form that this investment can take is public-private partnerships. Mozambique for example, recognized the role of private sector as engine of growth and development and has a very attractive Investment Law. Consequently, in a productive dialogue framework with the Private Sector, is implementing an economic reform agenda geared towards a business conducive environment and Investment attraction. We have approved and implemented large investments in different sectors by companies such as BHP – Billiton, Sasol, CVRD (Vale), Coca-Cola, SABreweries, etc.
Investments have been flown in the Tourism, Transport, Energy generation, Transmission, Mining, Oil and Gas, Agriculture and Agro business and Financial Services. However, we consider that it is not sufficient to attract investment at any cost. It is equally important to ensure that this investment brings long term benefits for the Continent. The challenge is to find a balance between attracting foreign direct investment, for example through attractive fiscal regimes, but at the same time ensuring that the country benefits, for example through reinvestment of profits, links to local businesses, or decent job creation. In other words, Africa must maximize the positive externalities – ensuring that there is knowledge and skills transfer, for example through the encouragement of the hiring and training of local labour, and the use of local companies as suppliers.
The private sector of developed countries should be more aggressive in exploring the potential that Africa possesses, expanding commerce through large, medium and small scale investments. Africa needs to develop a strong public-private partnership with the objective of promoting growth and creating a stable investment climate. Africa needs export-oriented industries, which allow its products to access the international market. Agriculture requires investments in support infrastructures, improved seeds and fertilizers so that it can become modern and productive.
Africans ought to strive to maintain political and macroeconomic stability, accelerate reforms, guarantee economic stability, maintain good governance and, above all, develop a quality public service and a strong leadership that guarantees stability in the economic system and offers predictability and stability to private investors.
H.E. Aiuba Cuereneia
Minister of Planning and Development, Mozambique
