Attracting businesses rather than development aid: in Davos, Africa is striving to change its image to mobilize more private investment, with already a new fund of one billion euros for its start-ups.
“There is a history of challenges and risks” linked to an investment in Africa, recognized Marie-Laure Akin-Olugbade, vice-president of the African Development Bank. “But there is also the great story of a great investment opportunity” that the continent “must tell”. “Saying what the continent has to offer is already a very good way to bring in the private sector”she said in Davos, where the annual meeting of the World Economic Forum ends on Friday January 19.
No more multiple panels on development aid. African decision-makers this year mainly debated free trade, investment, innovation and energy transition. “We can really benefit from the digital revolution”for example noted Kashim Shettima, Vice-President of Nigeria, during a discussion devoted to the project of an African Free Trade Area (AfCFTA), which brings together forty-seven countries and a total of 1.4 billion people .
In Davos, “I think the world is starting to understand the importance of the role that Africa will play in the next ten, twenty years”assured AFP the president of the World Bank, Ajay Banga. ” Things change. They’ve been changing for a decade, in music, in art… Why wouldn’t the business world change too? launched Franco-Beninese singer Angélique Kidjo in an interview with AFP. For a long time, the interests of rich and Western countries have come before ours! »
The Timbuktoo initiative
“Africa is increasingly emerging as an investment destination”, assures Achim Steiner, head of the United Nations Development Program (UNDP), interviewed by AFP. The UNDP presented in Davos an initiative called Timbuktoo aiming, over ten years, to invest one billion euros of public and private capital in innovative start-ups throughout the continent.
Africa today represents only 0.2% of young companies in the world in terms of value. Almost all of the risk capital injected into start-ups on the continent comes from abroad and 83% comes from just four countries: Nigeria, Kenya, South Africa and Egypt, according to the UN.
“So many ideas die quickly, simply because there is no one to bet on them.”noted Mr. Steiner. “African start-ups lack the capital to be competitive on the global stage”, also lamented Rwandan President Paul Kagame at the launch of Timbuktoo. He announced a contribution of 3 million euros to the fund.
Beyond financing, the project also plans to open eight innovation centers in Africa and a presence in several universities. “One of the main challenges to achieving development goals in Africa remains the capacity to mobilize financial resources,” while hundreds of billions of dollars are needed by 2030, said Ghanaian President Nana Akufo-Addo at the launch of Timbuktoo.
“Given that most African economies already have limited fiscal capacity, the private sector will play an important role”he insisted. “Humanitarian situations are multiplying, needs are increasing but, at the same time, the budgetary capacities to respond to them are reducing”noted at another event in Davos Anne Beathe Tvinnereim, Norwegian Minister for International Development.
But ” Perception “ risks can be ” a problem “, she conceded. This is where public money can absorb part of the risk. The United States and Norway recently launched a program dedicated to financing small and medium-sized businesses in the African agricultural sector. It will not invest directly in companies, but in funds also including private investors. This can work “if the guarantee mechanism is well designed”underlined the minister.