Africa to Concentrate on Investment

By Isabel Goncalves Posted 07 June 2006 @ 07:37 pm EET     Print     Reprint     E-Mail     Comments

Johannesburg (IBTimes.com) - Africa should not rely solely on foreign aid to alleviate poverty and create more jobs, say delegates gathered at this year's World Economic Forum (WEF) on Africa, taking place in Cape Town. Heads of state and business leaders at the opening yesterday agreed that, although foreign aid should not be disregarded as it was useful for many of the poorer countries in providing a good platform to set up basic infrastructure, Africa should look to itself for solutions to poverty and unemployment.

The African economy is growing at about 5,5%, its fastest pace in 30 years, yet this will not be enough to reduce the poverty and underdevelopment that is crippling the continent, according to the WEF. Last year, Group of Eight (G-8) countries pledged to give African states an additional $25bn in foreign aid by 2010, and agreed to 100% debt cancellation for up to 38 highly indebted poor countries.

However, doubts remain about whether the G-8 governments will be able to fund these promises. The theme of this year's summit, "Going for Growth", underscores the need to find ways to boost growth on the continent, and to ensure that Africa makes use of every avenue available to achieve this.

Many African countries, including SA and Nigeria, are benefiting from the commodity boom as India and China grow their economies. But ways of sustaining this growth have to be found so that the continent does not stagnate when the commodity cycle turns.

"We need to get more capital inflows into the continent, we need to ensure higher rates of investment in African economies in order to address poverty and underdevelopment, so we can take steps to reduce them," President Thabo Mbeki said in a panel discussion yesterday.

Mbeki said improving political and economic conditions, as well as removing barriers to doing business and improving regional trade, were some of the key issues which should be addressed to ensure that higher economic growth in Africa could be achieved.

"We also need to entrench and consolidate our democracies, that is why the peer review mechanism is so important, as it allows us to set benchmarks against which countries can be measured," Mbeki said. Investing in education and human resources was seen as urgent in order for growth to be sustained in coming years.