THE BLOG

Time for Africa to Get Serious About Investment

As the global economic gloom begins to lift, it is tempting to believe that everything is returning to normal. Tempting -- but wrong. The devastating effect of the crisis on the public finances of the rich countries will squeeze aid budgets, probably permanently.

For developing countries, especially in Africa, that means two things. First, they must spend the aid they do receive over the next few years wisely. Second, they must redouble their efforts to reduce their dependence on aid by attracting private investment, creating jobs, and building a domestic revenue base.

Fortunately, the outlook for private enterprise in Africa has rarely looked brighter. In 1989 there were only five stock exchanges in Sub-Saharan Africa. Now there are sixteen, with many delivering extraordinary returns both prior to and since the economic crisis.

The key to this success has been improvements in governance, with many African institutions turning the page on the mistakes of the past and establishing or reforming their institutions in accordance with more democratic and market-based principles. There has been a particular effort to improve the climate for investment, and today the continent boasts some of the world's best business reformers. Countries like Rwanda, Botswana and Tanzania are setting an example not just for Africa but for the developing world as a whole about how to implement progressive economic policies and generate sustainable growth. And, as evidenced by the key agenda focus on ICT at the recently concluded African Union Summit, we are also driving innovation.

My own country of Sierra Leone symbolizes the transformation in Africa's fortunes. In 2010 the future looks brighter than it has for many years. Today, prudent economic management, along with what World Bank data suggest is the fastest improvement in political stability in the world over the last decade, mean that this year Sierra Leone is expected to record its eleventh straight year of uninterrupted economic growth. Growth in 2009 was more than double the average for the rest of Africa.

As stability has returned to Sierra Leone, we have tried to put the country on a path from aid dependency to a dynamic self-sustaining economy. My 'Agenda for Change' focuses public and private investment and reform efforts on the key strategic sectors most critical to unlocking the full productive potential of our economy such as agriculture, energy and transportation.

As well as this hard infrastructure, we are reforming Sierra Leone's soft infrastructure, by streamlining tax administration, establishing fast-track commercial courts and cutting red tape. These reforms have seen our country climb 20 places in the World Bank's annual Doing Business rankings in the last three years, and made Sierra Leone one of the top 5 countries in Sub-Saharan Africa for investor protection and the ease of starting a business.

Because we recognize that corruption can stifle enterprise and growth, we have legislated to give the Anti Corruption Commission robust new powers, leading to a sharp rise in the rate of prosecutions. While there is a long way to go, this fight against corruption is working as shown by Sierra Leone's 12 place rise in the 2009 Transparency International Corruption Perceptions Index.

As our reform efforts have gathered pace, a growing number of international investors have started to sit up and take notice of the opportunities that Sierra Leone has to offer. Last November, the Sierra Leone Trade and Investment Forum in London was twice oversubscribed. Luminaries such as HRH the Prince of Wales, Tony Blair and George Soros - whose Soros Economic Development Fund has invested £5m in the Sierra Leone agriculture sector - explained why they are backing Sierra Leone to succeed.

Last month, we concluded a major deal with international bioenergy company Addax that will see the company invest $400m in a 30,000 hectare sugar plantation, a state of the art bioethanol factory, and an innovative, environmentally efficient power plant that uses the waste product from the fermentation process to generate electricity to be sold back to the national grid.

Yet this investment barely scratches the surface of the commercial potential in Sierra Leonean agriculture. We have more than 4 million hectares of rich arable land not yet under cultivation, and soils and climate well suited to growing everything from rice and fruit to oil palm and cocoa. We are also attracting interest in our fisheries sector, in the development of hydro energy and in improving our tourist infrastructure.

At the start of this new decade, we will also be undertaking an extensive privatization program including of the Freetown port, one of the world's best natural harbors. By putting public assets in private hands at a fair price, we recognize that we can improve service delivery beyond any level previously experienced by my countrymen, while ensuring a good deal for investors and taxpayers alike.

Of course, to take advantage of these untapped opportunities, private investors will rightly expect a stable investment climate and a pro-business reform agenda. As a former businessman, I understand this. At this new dawn of investment and opportunity, outdated perceptions of how Africa operates are being shed; investors are expressing surprise rather than despair.

We know that it is only by attracting investment and growing the private sector that African countries will sustain their economic growth and transform their societies.

It's time for investors to make their move.