”WE SHOULD INCREASE INVESTMENT IN AFRICA” (Sweden’s Finance Minister Anders Borg )

WITH one billion people living in 54 countries, Africa is facing widely differing opportunities and challenges. The pace and direction of the transformation taking place on the continent differ between the countries. However, the general trend is clear: a new Africa is now emerging that is increasingly characterised by high economic growth, stronger democratic values, fewer interstate conflicts, sounder macroeconomic policies and increased trade.

The growth rate in sub-Saharan Africa has remained at an average of five per cent over the past 15 years, with the exception of the global financial crisis years of 2008 and 2009. Over the next five years, Africa’s economy is expected to grow faster than that of any other continent. Increased political and macroeconomic stability and lower levels of conflict in many African countries offer the potential for sustained economic growth.

In recent years, one factor contributing to the strong growth rate has been the development of information and communications technology (ICT), and particularly the explosive growth in mobile telephony. This has made it easier for people to obtain information about everything from health care to agricultural prices. Recent steps by the Nigerian Communications Commission allowing customers to retain their mobile telephone numbers when switching service providers indicates how important it has become to have access to a reliable service, not least since mobile telephones also are the main vehicle for reaching the internet.

The middle class is continuing to grow. Many people have greater purchasing power than ever before and have adopted modern information technology. Today, millions of Africans use their mobile telephones to do their banking. This growing African middle class is displaying new political and cultural self-assuredness, and has resulted in substantially increased domestic consumption. This in itself promotes economic growth, creates aspirations and raises the expectations of millions of people and stimulates further development.

Reforms have been implemented in many countries to promote trade and investment. Inflows of private capital have increased and now vastly exceed total development assistance. More and more countries have been classified as middle-income countries.

Africa’s future is largely in the hands of its young and growing population. According to UN estimates, Africa’s population will double by 2050, when almost one in five people on Earth will be living on the African continent. Creating education and employment opportunities for this large, young population will be a challenge. If this is not possible, there is a risk that the demographic imbalance will create political and social unrest. At the same time, the potential and the opportunities are enormous. A new self-confidence is evident among African governments and individuals, companies and organisations. This is expressed in various international forums where African influence is increasing in a number of different fields.

Africa is a continent of opportunities – one of the last emerging investment markets.

Improvements can be seen in regional trade and integration. But more efficiency is required in the shape of improved institutional capacity and infrastructure, with fewer intra-African barriers.

Despite increased financial flows, Africa is facing a huge investment gap. Lack of investment in infrastructure is one of the main obstacles to Africa’s development. Huge investments will be needed in the coming years, which will require considerable sums of private and public capital.

We need to explore how governments and international financial institutions can collaborate further to attract more investment to African countries. Macroeconomic stability is a key prerequisite for boosting investment. Many African countries have made significant progress in this regard. Prudent fiscal and monetary policies are now reflected in low debt levels, moderate deficits and manageable inflation. The institutional framework that supports macroeconomic stability could be strengthened further. The business climate is a key driver of economic growth and another area where many African countries have made important advances. It is crucial to keep up the pace of structural reforms that improve the functioning of the economy, in order to further stimulate entrepreneurship and productive investment.

Global trade is one driving force for the realisation of Africa’s potential. However, boosting regional exchange is equally important. Regional cooperation can act as a stepping stone towards successful integration with the wider global economy. Regional cooperation and integration are also very high on the ECOWAS agenda.

Nigeria has experienced impressive growth in recent years and there is every reason to believe that this will continue. The government’s vision of making Nigeria one of the world’s 20 strongest economies by 2020 is within reach. If handled wisely, this growth will improve the living conditions of millions of Nigerians and inspire hope for its young and growing population. The government’s stated commitment to good governance and fighting corruption could help bring about real progress towards these ends.

However, Nigeria’s position in the region is not only based on its economic weight. Nigeria also plays an instrumental role in supporting ECOWAS’s efforts to promote constitutional order and peace and security in the region.

Trade between Nigeria and Sweden has increased steadily over the past five years, and Nigeria is now our second-largest trading partner in sub-Saharan Africa. We have common interests in telecom and renewable energy, two sectors with great importance for the future.

Positive developments in Nigeria motivate the renewal and expansion of our bilateral ties in order to capitalise on the new opportunities for cooperation that are now emerging. For instance, Nigeria’s innovative use of mobile services paired with Swedish experience and young entrepreneurs in this field may be a recipe for strong partnership.

Our joint trip to Nigeria and other countries in Africa is an expression of the Swedish Government’s desire for stronger political and economic relations with the new Africa.

Africa is clearly changing and there is renewed optimism about its future. The progress made over the past decade inspires hope for more sustainable and inclusive development, with lasting improvements in living conditions for the continent’s large and growing young population. Coming from Sweden, with our history of peace, democracy, pluralism and respect for human rights, we have a strong belief that these core values will also benefit the people and countries of Africa.

Africa’s challenges and opportunities are shared by Sweden and the rest of the world. Africa is part of our own reality. We are engaged in Africa’s future, not only because it is our moral obligation but also because it is in Sweden’s own interest.

• Borg and Carlsson are the Swedish Minister for Finance and Swedish Minister for International Development Cooperation.

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