Risk Perceptions Hurting Investments in Africa

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Addis Ababa — At the 30 th Session of NEPAD Heads of State and Government Orientation Committee meeting ahead of the AU Summit the Executive Secretary of the UN Economic Commission for Africa said that risk perception, including concerns about the political, legal and regulatory environment are critical in the decision to invest. The meeting was held this week on the theme: Unblocking Policy, Legal and Regulatory Obstacles to Stimulate Investment and Enhance Infrastructure Project Bankability .

"Africa must begin to tell its own story, stressed Mr. Lopes, noting that for every publicised bad news about Africa, "be it a violent conflict, human rights infringement, shaky election process or instability, we can find the equivalent in developing Asia."

Citing ECA's analysis, he told the esteemed forum that the most challenging stage of project preparation is establishing the enabling environment; as well as tackling legal, regulatory and institutional impediments.

"The Trans-African Highway network was conceived in the early 1970s but today, more than 40 years down the line, missing links and sub-standard sections still constitute about 20% of the network," he said and added that only 50% of the 708 projects of the Second United Nations Transport and Communications Decade in Africa (UNCTADA II) were completed.

Furthermore, the completion rate of projects in the NEPAD Infrastructure Short Term Action Plan (STAP) was equally low across all sub-sectors - about 15% for energy; 17% for transport; 11% for ICT; and 9% for water and sanitation projects.

"Red tape and bureaucracy are also bottlenecks in project implementation and are rank equally with a lack of finance in this regard," said the Executive Secretary.

He asked the meeting to consider the need for sustained investment in infrastructure and commitment to devoting an adequate share of infrastructure financing in national budgets.

He also proposed the need to take steps to address negative perceptions about Africa; and the importance of adopting regional standards and policies to overcome the challenge of project implementation across multiple legal jurisdictions.

He further called for stimulating the interest of the private sector in infrastructure development, including through public-private partnerships and other innovative mechanisms. "As we look at 2063, we will be close to 3 billion or 30% of the world's total. If we just project our trajectory, our wealth would nevertheless be only 10%," he said, stressing that getting to an Africa that has its deserved place in the world "requires that we change the trajectory for the better."

The Executive Secretary also held a number of bilateral meetings with partners, Heads of States and Governments; as well as heads of various international institutions attending the AU Summit.

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