‘Africa can’t afford complacency in FDI stakes’

Africa must put its house in order if it wants to attract investment for long-term infrastructure projects. According to Johan Greyling of KPMG, there is no magic wand to bring about investment for the much-needed infrastructure projects on the continent. “As a continent we cannot just expect investors to bring their money just because we need it or want it. Sound economic policy and a stable macro economic environment is needed to entice the private sector to come to the party,” he said. “We must also not be under any illusion that Africa is the only continent vying for funds. We are competing in a global market and major investors can consider going to a lot of developing areas other than Africa. They do not have to come to our continent.” He said if Africa did not clean up its act and start getting things right, investors would not be knocking on its door. “The first rule of thumb to attract investors is to be an exciting destination for investors and lenders alike.” Greyling said Africa more than any other continent in the world needed to do serious introspection and fix what was lacking to attract investment as its infrastructure continues to be under much strain. “Various factors contribute to this including the fact that 500 000 people are born on this continent every week. Currently some one billion people are living in Africa. This is expected to double in the next thirty years. More often than not the infrastructure is either very aged or lacking completely.” And as the population continues to grow and urbanisation increases, the demand for improved infrastructure will increase. According to Greyling attracting investors firstly means improving government effectiveness. “That means having sound political policies in place, transparency in processes, safety of investments and guaranteed returns. Governmental effectiveness is no doubt seen as a significant barrier to delivering infrastructure and often attracting the necessary investment.” He said while insurance could be bought against violence or expropriation, investors were reluctant to give money to areas where political instability or corruption were at play. “Africa must decrease its risk factors if investors are to be attracted. Improving its political stability is key, while solid frameworks must be developed along with clear incentivised tax regimes, unrestricted movement of capital, investment protection and the creation of an environment where it is easy to do business.”