- African leaders challenge the myth of high investment risk in Africa, backed by data showing lower loss rates.
- The continent offers high returns and is poised for growth with a young workforce and rich resources.
- New initiatives like the Africa Investment Guarantee Agency aim to attract more global investors.
At the World Governments Summit in Dubai, African leaders and business leaders have called for a reevaluation of the perceived high investment risk in Africa. They argue that the continent is safer for investment than commonly thought, with data supporting lower loss rates and high returns. This shift in perception is crucial as Africa stands at the crossroads of global demographic, energy, and agricultural transitions, offering significant opportunities for growth.
Dr. Akinwumi Adesina, President of the African Development Bank Group, cited data from Moody’s Analytics showing that the rate of loss for investments in Africa over the last 14 years was only 1.7%, compared to 13% in Latin America and 10% in Eastern Europe. This surprising finding—that Africa has a lower risk profile than these regions—challenges the prevailing narrative. Tony Elumelu, founder of the Tony Elumelu Foundation a prominent business leader, reinforced this by stating, “There’s nowhere else we get the kind of returns on investments as what we make in Africa,” highlighting the continent’s potential for high returns based on his extensive investments across multiple sectors.
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To bridge the perception gap, the African Development Bank Group plans to establish the Africa Investment Guarantee Agency to address historical barriers to investment and offer coverage against climate, equity, political, and currency risks. The Africa Investment Forum Market Days in Morocco recently secured $29.4 billion in investment interest within 72 hours, mobilizing over $225 billion since 2018, demonstrating strong investor appetite when barriers are removed.
Africa is positioned at the nexus of global transitions, with 75% of its population under 35, including 600 million people aged 15-35, making it a future workforce powerhouse. Its vast mineral resources, crucial for electric vehicles and renewable energy, were emphasized by Dr. Adesina, who noted, “Whether it is lithium-ion batteries, electric vehicles, platinum, copper, graphite, or any component of lithium-ion batteries, all are in Africa. Thus, what Africa does with its resources will shape the future of the world.” This underscores Africa’s indispensable role in the global energy transition.
Sierra Leone’s Chief Minister David Moinina Sengeh challenged the “resource curse” narrative, introducing “conscientious concessions”—deals that benefit investors, governments, and local communities. He explained, “It’s so easy to speak about concession from any one of these countries or from private sector that is 100 years, lots of waivers, employees coming from abroad, everything gets shipped out. That’s not consensual. You’re talking about bad deals, by the way, which turned things into a curse, and I think that’s what people talk about.” He added, “If we think about not just pennies, but the people and the planet, then the deals and the agreements we sign, with our conscience, will work for the people, will bring economic value for everyone, for the investor, for the government, and the people who are there,” advocating for balanced agreements supported by the African Development Bank Group’s African Legal Support Facility.
The focus is on industrializing Africa and moving beyond raw commodity exports, with Dr. Adesina stating, “The export of raw commodities of any kind leads to poverty. However, the export of industrial value-added manufacturing to increase Africa’s share of global manufacturing and to move up in global value chains is the path to prosperity.” Major initiatives include a $3 billion investment in special agro-industrial processing zones and “Mission 300,” a partnership with the World Bank to provide electricity access to 300 million Africans. The African Continental Free Trade Area, with a $3.4 trillion market potential and nearly 1.5 billion people, further enhances investment opportunities.
African leaders asserted that Africans will drive their own development, with Chief Minister Sengeh declaring, “Who will dominate in Africa? Africans will dominate in Africa,” calling for “progressive, social, democratic radicalism” to ensure inclusive growth. The message to global investors is clear: as Tony Elumelu concluded, “The time is now,” emphasizing the risk of missing out on Africa’s opportunities.
