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Corporate Africa Key to Unleashing Investment Potential
A powerful shift in economic momentum is underway in africa. Increasing investment, encouraged through improvements to the continent’s business climate, is helping drive rapid economic growth. According to the IMF, Africa is forecast to grow at 5.5-6% in 2011.
What Africa now needs is a commitment to implement policies that will further improve the business climate. Strong partnerships between the public and private sectors are crucial to the improvement process.
ICF is living testimony of the results that can be achieved when the public and private sectors join forces. In just over three years of operation, our unique public-private structure has initiated 39 projects, delivering tangible improvements to 29 African countries, and our portfolio continues to expand at a rapid pace. This is largely due to the commitment of African governments, which recognise that they, rather than external agents, are best placed to change Africa from within. Capable of modifying policies and enforcing laws, governments hold the key to a more enabling business environment.
However, whilst Government commitment is critical, our experience shows that investment climate improvements are faster and more effective if the private sector is involved. An example is a project we supported in Burkina Faso to simplify the application process for construction permits. The original request for reform came from the local private sector, which was finding the long delays and high costs prohibitive to business operations.
The private sector worked closely with the Government to increase efficiencies, including the establishment of one-stop shops for construction permits called Centres de Formalités des Actes de Construire (CEFAC). Streamlining the process has reduced the number of procedures from 32 to 15, the number of days from 226 to 19 and the costs from US$2,270 to US$480. The local Chamber of Commerce is now responsible for issuing permits, putting the private sector at the heart of a public service.
Such improvements have an immeasurable impact on investor confidence and can only be achieved through public-private partnership. Collaboration increases cost effectiveness and ensures ownership is spread amongst a wider stakeholder group, ensuring sustainability. As African governments continue to create more favourable conditions for investment, Africa’s reputation as a place to do business will improve and entrepreneurs and investors will take increasing advantage of Africa’s untapped potential.
While governmental appetite for reform is at an all-time high, there is undoubtedly room for the private sector to play a more active role. Corporate Africa needs to put its name behind practical involvement and, in doing so, respond to the strides being made by governments.
By working with policy makers to identify priorities for intervention, as well as investing in training initiatives, technology, governance and improved infrastructure, companies can help rejuvenate the domestic business environment and ensure it is ripe for enterprise.
There is a place for every corporate to become involved – and it is worth remembering that the private sector will be the primary beneficiary of improvements. Multinational companies need to commit not only financial resources, but also their time and expertise to public-private projects and organisations such as ICF, which are delivering real change. Domestic companies also need to pledge their support for a better business environment.
By working closely with policy makers to identify priorities and adhering to reforms, there is greater potential to attract capital and grow.
It is unrealistic to expect Africa’s economic gains to continue through governmental efforts alone. Co-operation with business is critical if we are to ensure the best solutions are identified and appropriately resourced. The concept is proven; we now need to put it into practice. Only by working together will Africa finally realise its very real investment potential.
The Investment Climate Facility for Africa (ICF) works to remove the barriers that exist to doing business in Africa, recognising that a healthy investment climate is crucial for the continent’s economic growth.
More information can be found at www.icfafrica.org.
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