By Peter OBIORA InvestAdvocate
Lagos (INVESTADVOCATE)-Christine Lagarde, the managing director (MD) of the International Monetary Fund (IMF) Thursday said $80 billion investment inflow is expected this year in Africa.
Lagarde said this in her keynote address a titled ‘’ Africa Rising-Building to the Future’’ at the Africa Rising Conference in Maputo, Mozambique.
‘’And for good reasons, Africa is now a growing investment destination for both advanced and emerging economies—with a record $80 billion inflow expected this year,’’ she said.
According to the IMF chief, it is no surprise that ‘frontier economies’ such as Kenya, Uganda, and Botswana are challenging old stereotypes and roaring loud as Africa’s lions.
Though, she affirmed that the tide of growth has not lifted all boats and poverty remains stuck at unacceptably high levels—still afflicting about 45 percent of the region’s households. ‘’Inequality remains high. And some countries, still facing recurring internal conflict, are struggling to exit from fragility,’’ she said.
She further affirmed that Africa is expected to grow by about 5.5 percent this year and next, and the poorest countries even faster—close to 7 percent.
Lagarde said building the future of Africa requires three (3) policy priorities which include building infrastructure, institutions, and people.
The IMF managing director noted that to build infrastructure, such as energy, roads, and technology grids, are the foundations of any strong and durable edifice, which would in practice close Africa’s infrastructure gap.
‘’Over the past three decades, per capita output of electricity in Sub-Saharan Africa remained virtually flat. Only 16 percent of all roads are paved, compared with 58 percent in South Asia. These shortfalls represent huge costs to businesses—and to people,’’ the IMF chief said.
She said many countries in the region are taking encouraging steps to close this infrastructure gap. ‘’In Ethiopia and Mozambique, for example, investments in the energy sector are being scaled up, including through projects that promote cross-border trade in electricity. Kenya and Côte d’Ivoire are also initiating regional infrastructure projects in electricity, and road and railroad networks,’’ she affirmed.
According to Lagarde, these investments are critical for growth to be sustained—and broadened. Also, high quality infrastructure can be a magnet for foreign investment and can accelerate diversification and employment creation, and support further regional integration.
‘’Yet the costs of closing this infrastructure gap can be daunting. The investment needs for the region are estimated at about $93 billion—annually. In most cases, the investments are large and upfront. They need to be carefully selected, managed and implemented within a medium- to long-term budget perspective,’’ Lagarde said.
