Washington, D.C. — "How can Africa be a priority and at the same time there are no funds for investment?" a participant stood up and asked panelists discussing "Attracting financing for African businesses" at Tuesday's Africa Forum 2000.
In various forms that question has surfaced in session after session here. Although Africa has been attracting more investment money than ever in recent years, it is still far less investment than should be coming into Africa, in the view of conference participants. "
Russia has many of the same problems as Africa," says Chris Kirubi from Kenya, "yet the flow of capital there continues."
In many ways Africa has been tagged as a place for "aid," not investment, say many panelists as well as participants. And that attitude has cost the continent money. Africa for the most part has not been a part of the dramatic expansion in global trade that has taken place over the last fifty years.
It's too risky, many potential investors feel. "In 17 years of working with investors," acknowledged Joan Edwards, of the Overseas Private Investment Corporation, "I haven't been able to change investors." Another panelist remarked, "Right now you can't sell dreams; you can only sell real businesses."
The problem, say many in attendance here, is selling the value of their very real businesses in Africa. In 1994, Voahangy Ramananarinoro of Madagascar used her savings to buy four sewing machines and train five seamstresses and began making children's clothes for export. She now employs 100 women who produce 5000 dresses per month. She wants to expand but bank interest rates in Madagascar range between 25 and 30 percent. In Africa, "opportunities are there," she argues, but "financing is the missing link."
The World Bank/IMF Africa Club that is sponsoring this conference hopes the presence of entrepreneurs like Ms. Ramananarinoro will generate more interest in investing in small businesses like hers in Africa. The club, along with the World Bank and IMF also hope that larger investment schemes and partnerships will grow out of these annual sessions.
"Recent history," Bank president James D. Wolfensohn and IMF Managing Director Horst Köhler, said in a joint statement at the start of the conference, "shows that countries that pursue the right policies, operating in a growing world economy, and with the right support, can achieve rapid economic growth and reduce poverty."
