professor nicholas biekpe president: africagrowth research& professor of development finance...
TRANSCRIPT
Professor Nicholas BiekpePresident: Africagrowth Research&Professor of Development Finance &
EconometricsUniversity of Stellenbosch
Introduction
Economic growth & Poverty alleviation– Direct link between economic growth, poverty
alleviation and resource mobilisation efforts;
– Links between human resource capacity and efficient resource mobilisation outcome;
Investment and development conundrum – Development requires resources;
– Resources require relevant skills-lacking in Africa
Why Invest in Africa?
Under-utilised human and natural resources;Expanding consumer base; Improving governance structures in
governments and private sector; Improving economic and political security;A continent is hungry for development- can
only get better;
Investor’s Checklist
Purchasing power of population; Level of Education; Level of Infrastructure Development; Level of flow of FDI into country; Skill of labour force; Degree of militancy of Unions; Geographical location; Consumption pattern;
Resource mobilisation: A brief
historical perspective Great depression and the need to mobilise
domestic resources; Positive intervention of states during the
depression; Europe and the US- Intervened to create
favourable conditions for resource mobilisation efforts;
Post-independent Africa- Intervened to create centralised political and economic administrations (this did not work!)
NEPAD and Resource Mobilisation- what is new now?
Involves business for the first time;NEPAD has well defined objectives;Emphasises on partnership rather than
donor support;Puts governance at the top of its agenda; Stresses on self-reliance rather than
donor reliance.
Some key objectives of NEPAD on the Resource Mobilisation Front
Facilitate business development in Africa; Promote transparency and good governance; Attract Investment (e.g. FDI and ODA); Reduce cost of doing business; Promote the spirit of entrepreneurship; Create environment for efficient taxes and
savings; Marketing Africa as an investment destination.
Impact of development grants on economic development
Grants mostly create obstacles to development;
Grants tend to serve donor interest;Historical pattern of failure from donor
models;Grants create a cycle of perpetual
dependency ;
Main resources channels: Inflow & Outflow
Figure 2: Resource Flow Channels
Inflow Channels Outflow Channels
Savings;FDI;TaxesODA;Debt Relief;Export Earnings;Capital markets and other financial instruments (e.g. venture capital, private equity, insurance etc.)Other private sector injections;
Capital flightImportsDebt servicesProfits paid to foreign investors/ shareholders
Source: ACIA & NEPAD (2004)
Key obstacles that really prevent investment in Africa
Cost of starting a business Dealing with numerous licences; Cost of hiring and firing staff; Registering property; Getting credit; Investor protection; Paying taxes; Cost of trading across borders; Enforcing contracts Closing a business
Conclusion
To attract global investors, Africa will need to:– Promote transparency and good governance;– Reduce cost of doing business; – Improve and speedup capital markets reforms;– Market Africa as an investment destination.
continue
Encourage savings;Strengthen export capacity;Support venture capital initiative;Encourage small enterprise schemes;Help strengthen capacity to collect local
taxes;Develop schemes to attract sustained FDI
flow;