7.8 C
Sunday, May 29, 2022

Private Capital To Africa Seen At US$55 Bn In 2010


Private capital flows into Africa are estimated at $55 billion this year from $49 billion in 2007 owing to improved macroeconomic policies across the continent, an Africa Economist for the World Bank said last week.
African economies fared much better than expected during the global recession because many of their governments maintained prudent macroeconomic principles and kept up public investments.
“We are seeing private capital flow back into Africa after the recession,” Shanta Devarajan, the World Bank’s chief economist for Africa, told Reuters in an interview.
“The fact that African policymakers responded with prudent policies during the crisis means that the policy environment in Africa has never been better, the productivity of external resources in Africa has never been higher.”
In some cases, the local currencies will appreciate as a result of the inflows, but that could be managed so the real exchange rate does not strengthen too much, he said. In addition to the private capital, Africa will also be receiving debt relief and aid, and remittances.
Funds sent home to the region by citizens living abroad are forecast to grow by almost two percent in 2010 from the $21 billion previously, according to the Bank.
Inflation in the mid-2000s was half what it was in the beginning of the 1990s, Devarajan said. In 1993, there were 23 countries with inflation higher than 20 percent but this had dropped to just two by 2007He gave no capital flow figures for 2008 or 2009 years of global economic crisis.
Until the onset of the global recession, the continent was growing at an unprecedented rate of 5 percent a year for a decade, and 22 non oil-exporting nations were growing at greater than 4 percent, the official said.
The World Bank now projects growth of 4.5 percent this year and 5.1 percent in 2011 on the back of good agricultural performance and public investment.
“Agriculture has been good in several countries, but also some of the investments that countries made in the past are beginning to bear fruit. During the crisis, countries did not neglect investment.”
Africa was poised to embark on two decades of economic growth of the kind that India in the last 20 years, Devarajan said.
However, the continent still faces deep development issues such as youth unemployment, a huge lack of infrastructure and bad leadership.
There are 200 million young Africans and 7-10 million of them join the labour force annually, mainly in the informal sector, Devarajan said.
The World Bank estimates Africa needs $31 billion a year for the next 10 years just to get its infrastructure up to the level of the island nation of Mauritius.
“There are risks in Africa, nobody is denying those, but look at the rate of return to investment in Africa, it’s the highest in the world,” he said.

Latest news
Related news