2018: What Africa Expects From Norway

Published on 23rd January 2018

The 2030 Agenda and the Sustainable Development Goals represents a break with the view of development as a process that is primarily dependent on aid. Aid alone is by no means sufficient to finance the SDGs. In line with the new global agenda for development, we are moving towards broader political and economic partnerships with African countries. Partnerships based on common interests, cooperation, trade and investment. It is therefore very encouraging to see that businesses are showing a clear commitment to the SDGs.

The private sector plays a key role in securing lasting development and poverty reduction. A well-functioning business sector is decisive for job creation and economic growth. This is why private sector development and job creation is one of five main priorities in Norwegian development policy. Naba is a key partner in forging partnerships between Norwegian and African businesses.

There are many investment opportunities in African countries. Opportunities related to the demographic dividend, a growing middle class, urbanisation and innovation related to use of new technologies. Increased regional economic integration could open up access to broader markets.

Economic growth in Sub-Saharan Africa seems to be recovering. We see a drive for innovation and creativity as entrepreneurs seek new ways to solve day-to-day challenges such as banking, access to energy, waste management, transport and logistics.

Many African countries are leading the way when it comes to making use of new technologies. To mention one example: Nigeria has the largest telecommunication market in Africa and the Middle East. There are currently more than 150 million active mobile users and more than 60 % are connected to the internet. This market is, by the Nigerian government, believed to have the potential to create 3 million new jobs.

However, challenges remain. Population growth in many African countries is outpacing economic and social development. Africa's population is set to double by 2050. African economies are not growing fast enough and are not creating enough jobs nor the right type of jobs. Thus, employment continues to be one of Africa's greatest challenges.

Another challenge is lack of good governance and predictable framework conditions. Investors need guarantees that their investments are safe. They need rule of law. African countries must take the lead in providing a conducive business environment for both domestic and foreign companies. There are some promising developments. The Presidents of Angola and of Nigeria have embarked on a reform agenda to diversify the economy and strengthen the regulatory framework for key businesses in their countries.

The importance of a predictable and conducive business environment is a key issue in our bilateral dialogue and in our development cooperation. Programs such as Oil for Development and Tax for Development are designed to improve resource management and improve the regulatory frameworks.

Together with partners such as the United Nations and the multilateral development banks Norway will continue to be an advocate for national resource mobilisation for sustainable development. We will step up efforts to combat corruption and illicit financial flows so that more revenue can benefit populations as a whole.

The International Financial Institutions are key partners in this endeavour as well as other efforts to strengthen the business environment through their country presence and close dialogue with policy makers. The International Financial Institutions are also key partners in the Compact with Africa initiative launched by Germany during its G20 chairmanship.

The aim is to develop country specific investment compacts between individual African countries, International Financial Institutions and G20-countries. Norway supports the Compact initiative. It fits perfectly with our aim to strengthen the private sector in African countries, and to encourage stronger commercial partnerships between Norway and African countries.

So far, ten African countries have joined the initiative: Morocco, Ghana, Rwanda, Tunisia, Egypt, Ethiopia, Ivory Coast, Guinea, Benin and Senegal. I cannot promise you that investments in these countries will be easy, but their governments have made a political commitment to create a more business friendly environment.

The idea behind the compact is that improved regulatory frameworks and better access to financing will lead to more investment from both domestic businesses as well as from G20-countries. Norway has joined the compact for Tunisia and Ghana.

I plan to open the Norfund regional office in Accra on March 19th. The establishment of this Norfund regional office fits perfectly with the Compact-initiative and so does the increasing number of Norwegian businesses investing in Ghana.

Tools available for private sector development

Norfund is the Norwegian Government's most powerful instrument for private sector development. Norfund's mandate is to invest where other commercial investors are more reluctant to invest, due to the high risks involved. With its mandate and 20 years of experience, Norfund is a pathfinder investor to sustainable and commercially viable investments in challenging markets. Responsible business conduct is essential for investments into businesses and jobs that can create real and lasting development in these markets. With Norfund's growth and investment profile, the Fund has become a relevant and attractive partner for other investors.

The Norwegian Government is committed to strengthening Norfund by increasing the annual capital allocation by 50 % over the next four years. The allocation for 2018 will be nearly NOK 1.7 billion. Norfund focuses on investments in Sub-Saharan Africa and in sectors like renewable energy, agriculture and inclusive financial services.

I am encouraged by Norfund's ambition to address the development challenges in the least developed countries. Norfund will soon launch an investment fund for Somalia with other investors (Nordic Horn of Africa Opportunities Fund). The Norwegian Export Credit Guarantee Agency (Giek) and Export Credit Norway are two other key instruments aimed at reducing risks for Norwegian investors and exporters.A competent workforce is also crucial. We have set aside NOK 500 million to support vocational training, and efforts to better match skills to jobs.

Support to strategic partnerships between commercial and non-commercial actors is a targeted approach that the Government is taking to boost investments and job creation. One example of a promising strategic partnership is built around Yara International's billion-dollar investment in a potash mine in Ethiopia. The mine is located in Afar, the poorest region of the country with high levels of unemployment. The potash mine holds the promise of creating much-needed jobs. Yet what Yara needs is professionally trained workers that can develop the mine and run it when it is operational. We are talking about mechanics, electricians, construction workers, and service staff trained to international standards.

Today, local workers do not have skills Yara is looking for. That is set to change. The strategic partnership between Norad and Yara aims to supply these skills locally.

In collaboration with the German development agency GIZ, the Development Fund of Norway (Utviklingsfondet) and local education authorities a local vocational training college is set to open in the second half of 2018. The target is to train 700 professionals that can be employed by Yara and other businesses in need of trained staff. This is a demand-driven project creating local development and poverty alleviation.

Norad in 2017 identified 20 strategic partnership projects worth a total of 250 million kroner to be developed further. Seven of these are already underway. We also support the African Development Bank's Jobs for Youth in Africa strategy, which sets the goal of equipping 50 million young people with employability skills and creating 25 million jobs by 2025.

Creating new partnerships and alliances between different actors is perhaps the most important key to achieving the SDGs. The concept of partnership has been broadened by the SDGs; not least, a more prominent role has been given to the private sector and businesses.

Africa is a continent full of potential for companies willing to seize opportunities. But we need to have open and frank conversations about both risks and opportunities.

By Marianne Hagen

State Secretary, Norway.  

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