The fourth Invest for Africa Forum (IAF) kicks off tomorrow in the New Administrative Capital. The IAF aims to promote investment and support for the infrastructure and mechanisms of intra-African trade. It will bring together governments and the private sector, civil society and international financial institutions. It will also showcase flagship projects and investments in the areas of infrastructure, digital transformation, mass transportation and renewable energy, as well as the success stories of young entrepreneurs.
The major event is part of Egypt’s commitment to attracting foreign investment to African development projects.
“I call on all of Africa’s partners to take advantage of the great investment opportunities across the continent, and to help finance continental infrastructure projects in the roads, railways, energy and the maritime sectors,” President Abdel-Fattah Al-Sisi wrote on the forum’s website.
Africa’s sustainable development plans need $2.5 trillion in funding. African governments cannot raise such funds without help from donor nations, international financial institutions and the private sector. And the situation is urgent. Not only is the continent’s population expected to rise to 2.5 billion by 2050, the World Bank estimates that, by 2030, Africans will make up 90 per cent of the world’s poor. African countries do not have the wherewithal to invest in poverty reduction programmes.
Africa possesses 40 per cent of the world’s natural resources. It sits atop 12 per cent of the planet’s oil reserves and 10 per cent of natural gas reserves. It produces 90 per cent of the world’s platinum, 50 per cent of its gold, 40 per cent of its diamonds, 25 per cent of its uranium, 65 per cent of its cocoa, 51 per cent of its phosphate and 33 per cent of its chromium and cobalt. It also has 60 per cent of the world’s untapped cultivable land according to the US Agency for International Development (USAID). Unfortunately, due to low levels of domestic investment, which barely come to 15 per cent of Africa’s GDP, African nations cannot utilise these resources to realise their demands for economic and human development. Foreign investment and financial and technological assistance are essential. Yet the current level of international investment in Africa — $46 billion in 2018, according to the United Nations Conference on Trade and Development (UNCTAD) — represents just 3.5 per cent of global foreign direct investment (FDI) flows of $1.3 trillion.
Africa is home to 98 per cent of the world’s undernourished people yet the continent possesses 60 per cent of the world’s unused cultivable land. Inadequate financial and technological capacities mean just 1.6 per cent of available water resources are being used for agriculture. The result is alarmingly low domestic agricultural production. Africa is forced to import 83 per cent of its food needs. An estimated $48 billion a year in produce is wasted due to poor storage facilities, roads and transportation systems which prevent the goods from reaching markets.
More than 600 million Africans live without electricity. Current electricity production accounts for only seven per cent of the continent’s potential, estimated at 300,000 megawatts. Only a third of the population has access to potable water and 70 per cent lack proper wastewater disposal. According to the World Economic Forum’s 2016 report, sub-Saharan countries have the world’s least developed education systems and the number of unemployed is predicted to rise to 50 million in 21 years.
If developed nations cooperated to put a portion of Africa’s untapped land under cultivation the continent would be free from hunger. Major levels of foreign investment are needed in order to take advantage of such potential yet the obstacles to investment are numerous.
They include a dilapidated or non-existent transportation infrastructure, widespread corruption, laws inhibiting investment, restrictions on the repatriation of returns from foreign investments, high customs duties on the supplies needed for investment projects and a lack of security and stability due to ethnic, tribal and religious conflicts. It will take concerted efforts on the part of African governments to overcome such problems and they will need serious and patient help from developed nations if they are to successfully promote real development and stability and curb the migration of Africans to Europe.
An encouraging development this year was the launch of the African Continental Free Trade Area (AfCFTA) during the African Union Summit in Niamey in July. With serious implementation and follow through on the agreement, Africa will become one of the largest trading blocs in the world. It is expected to boost intra-African trade from 16 to 30 per cent of the continent’s volume of external trade, reduce the overall cost of goods and services by $1 trillion, lure much needed foreign investment and generate job opportunities for millions of unemployed people.
Africa accounts for only two per cent of the movement of international trade, a figure that will not increase until African governments abolish customs impediments, improve port and transportation systems, halt widespread corruption and take other steps to encourage and reassure foreign investors.
The forum that starts tomorrow adds another building block to the Egyptian drive to promote African development and establish a continent-wide free trade market. Egypt has hosted three previous forums to promote investment and intra-African trade.
Before this, in June 2015, Egypt hosted a conference that launched the Tripartite Free Trade Area (TFTA), a free trade agreement between the Common Market for Eastern and Southern Africa (COMESA), Southern African Development Community (SADC) and East African Community (EAC). It represents 26 African countries with a combined population of 625 million people.
Upon assuming the chair of the African Union, Cairo confirmed that its priorities were to boost economic and social development, develop the industrial and agricultural systems in Africa to achieve food security, strengthen cooperation between the AU and its international and regional partners in peace and development, and create jobs.
President Al-Sisi said that Egypt’s immediate aims focussed on infrastructural development and regional economic integration, in which context he stressed the need to boost the transfer of technology and promote the development of the continent’s human resources.
The president identified three focal areas in this regard: trans-African infrastructural development, implementation of the executive stages of AfCFTA, and intensifying the job creation drive, targeting young people in particular.
At the end of the Africa Forum 2018 in Sharm El-Sheikh Al-Sisi launched two funds: an investment risk insurance fund in Africa to encourage Egyptian investors to invest and participate in the development of African countries, and an IT fund to promote the development of information infrastructure and digital transformation across the continent.
In addition, 250 training grants were made available to African personnel involved in combating corruption as part of Egypt’s efforts to promote cooperation in training and the exchange of expertise with fellow African countries in the fields of good governance.
Measures were also introduced to encourage and facilitate the work of African companies in Egypt and to increase technical cooperation in the fields of investment in human capital and digitisation. The president also announced in Sharm El-Sheikh that negotiations would be stepped up with international organisations in order to secure support for infrastructural development, including completing the Cairo-Cape Town highway.
Following the Arab-African Youth Forum in Aswan in March this year Al-Sisi announced that the Egyptian initiative to eradicate Hepatitis C virus would be extended to one million Africans and that the new phase of its 100 Million Healthy Lives initiative would include the screening of non-Egyptians staying in the country. He also invited researchers from African and Arab countries to benefit from the Egyptian Knowledge Bank and paved the way for a programme strengthening academic and cultural cooperation between Arab and African peoples.
President Al-Sisi had earlier instructed government agencies to work together to establish the first regional centre for business leaders with the aim of supporting emerging companies in Egypt and other African countries and designing a comprehensive training programme for young business leaders.
He called for an Arab-African fund to support business leadership and launched an initiative to train 10,000 Egyptian and African youths as computer application and electronic games developers over the course of the next three years.
*A version of this article appears in print in the 21 November, 2019 edition of Al-Ahram Weekly under the headline: In support of Africa