How to mobilize private capital towards Africa? This challenge is crucial for the development of the continent, particularly in the fight against climate change. Unfortunately, private investments in Africa still remain too limited. According to IMF estimates, it would be necessary to double the effort of the private sector in developing economies to achieve the objective of carbon neutrality by 2050. Likewise, the African Development Bank estimates that each year, there is a shortage of 108 billion dollars to finance infrastructure in Africa. However, the private sector often shows a certain reluctance to invest on the continent.
Several reasons explain this situation. First of all, political instability and armed conflicts are factors that deter private investors. According to Maktar Diop, president of the International Finance Corporation (IFC), the private sector organization of the World Bank, Africa is experiencing a period where many countries are ruled by military regimes, which creates an atmosphere of uncertainty.
To remedy this, it is necessary to facilitate private investments by reducing risks. Maktar Diop plans a 30% increase in IFC’s commitments with companies by 2023. To achieve this, he is banking on improving guarantee instruments and strengthening links with local banks. Indeed, the latter can play a key role in helping businesses access financing and minimizing risks. The IFC has also signed a risk-sharing initiative with Moroccan banks to support investments in Africa.
Another solution could be to use public development banks, such as the European Investment Bank (EIB), to attract more private investment. By encouraging investors to get involved, we can hope to obtain a ratio of 10 euros of private investment for each euro of public money invested. This would make it possible to finance more projects while strengthening the environmental impact in Africa.
However, it is also important to highlight the obstacles linked to the slowness of administrative procedures. Orso Vesperini, deputy general manager of the French group NGE, specializing in infrastructure works, deplores the prolonged deadlines for processing files. He cites the example of infrastructure projects which were approved three years ago but which have still not been carried out due to administrative delays. This excessive instruction time is incompatible with Africa’s urgent needs and hinders the continent’s development.
In conclusion, it is crucial to mobilize private capital towards Africa to promote its economic development and fight against climate change.. To achieve this, it is necessary to reduce risks and facilitate private investments through guarantee instruments and partnerships with local banks. In addition, it is important to speed up administrative procedures to avoid delays in the completion of projects. By combining these efforts, we can encourage greater private sector engagement in Africa and contribute to the continent’s prosperity.