Africa needs private investment - leaders
Presidents and finance ministers from countries including South Africa, Kenya and Rwanda and officials from companies including Royal Dutch/Shell Group and Anglo American Plc met in London this week.
Africa is the only continent where the proportion of the population living in poverty is increasing, according to the Commission for Africa, which British Prime Minister Tony Blair chaired. Under his presidency of the G-8, Blair has argued for more aid and debt cancellation for the region.
"No other continent would expect economic salvation purely from the public sector,'' said Mark Moody Stuart, chairperson of Anglo American Plc, the world's second-largest miner.
"If we are to get growth rates up we need significant changes. Yes, we need foreign investment, but we also need local indigenous business.''
Africa's economy expanded by 5.1% in 2004, the fastest in eight years, the Organisation for Economic Cooperation and Development said following an increase in commodity prices, aid and improved economic management.
Fiscal deficits averaged 0.5% of gross domestic product, below the US's 4.3%, Germany's 3.9% and the UK's 3%.
"Macro economic balance is necessary but not sufficient,'' said South African finance minister Trevor Manuel.
"Now a series of other things need to happen. We need to unleash the market potential of 800 million people.''
Continent-wide economic growth won't accelerate unless governments improved conditions for investment, leaders said.
As many as 300 million Africans live on less than a dollar a day, according to the United Nations.
Limited government investment in building roads, rail links and electricity has put off investors and hampered development. Improving regulations for business could lift GDP by 1.4% a year in African countries, according to the World Bank.
Africa, with GDP of $670bn, received $15bn of foreign direct investment in 2004, about a quarter of the amount China got, the OECD says.
The US economy, the world's largest, got $107bn. Private investment in 2003 ranged from 13.4% of GDP in Nigeria, Africa's biggest oil producer, to 1.6% in Malawi.
The Commission for Africa said improvements to Uganda's regulatory climate helped increase economic growth by around 7% between 1993 and 2002, reducing the number of people living on less than a dollar a day to 32% from 56% in that period.
In Mozambique, private investment doubled between 1998 and 2002 after the government introduced measures to attract investors.
Rahul Bajaj, chairperson of Bajaj Auto Ltd, India's second-largest maker of motorcycles, said India's growth in investment had been domestically generated and
called on African governments to "free up the entrepreneurial spirit of its people". - Bloomberg
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