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The private sector can unlock Africa’s promise - Alok Sharma

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The following article by International  Development Secretary Alok Sharma appeared in City A.M. on Friday 27 September 2019:

The success of Africa matters to us all.

The continent is home to four of the five fastest growing economies in the world. But still African countries currently receive less than four per cent of all global foreign direct investment. Around 20m jobs a year need to be created just to keep pace with its population growth.

This is a momentous challenge for Africa and the world. It is also a great opportunity. If we help create jobs and boost investment, we can help lift people out of poverty, while generating opportunities for African and British businesses.

Overall, an extra $2.5 trillion (£2 trillion) is needed every year to end poverty in developing countries and meet the 17 Global Goals, which aim to make the world a fairer, healthier, safer and more prosperous place for everyone, everywhere by 2030.

We cannot do this alone. We must mobilise private sector investment. So today, I am announcing £90m of UK aid that will help generate more than £500m of private sector investment in financial markets.

This will help small African financial services businesses and startups to grow and create 50,000 jobs. All of this will drive economic development.

As a result, 12.5m people — half of them women and girls — will have better access to financial services, including loans and bank accounts. This will help female entrepreneurs overcome the $42bn financing gap faced by small and medium sized African businesses owned by women.

Today’s UK investment builds on the success of Financial Sector Deepening Africa, an organisation which works to reduce poverty by strengthening Africa’s financial markets.

It is supporting the closing of the first East African Green Bond in Kenya, that will raise funds to build environmentally-friendly housing.

This follows its leading involvement in the launch of the first Green Bond in Nigeria.

The UK is also leading the way to help raise much-needed finance in the local Nigerian currency to boost economic growth, invest in infrastructure and create jobs.

Today, for the first time, a working group of experts – including senior leaders from my team at the Department for International Development, the Central Bank of Nigeria and the London Stock Exchange — are meeting in Nigeria’s capital Abuja to start developing so-called jollof bonds.

Named after the well-known west African rice dish, these bonds will reduce the risk and cost associated with borrowing in foreign currencies to make the most of vital investment in Nigeria’s future. I will take this forward as part of the UK-Africa Investment Summit in January.

The British public cares about ethical investment. New UK aid research shows that a large majority of UK savers want their investments to be socially responsible and consider the positive impact they can make on people and the environment across the world.

That is why part of the £90m UK aid package I am announcing today will catalyse a further £244m of private sector and public sector investment into projects across housing, health, education and infrastructure to benefit the poorest people.

Infrastructure is the backbone of economic growth. It improves access to basic services such as clean water and electricity, creates jobs, stimulates trade and boosts business. With the right tools and policies in place, infrastructure can help lift entire nations out of poverty.

But we also know that there are barriers to investment in infrastructure in developing countries, which continue to hold them back.

During a visit to Ethiopia last month, I announced a new International Development Infrastructure Commission to turbo-charge quality infrastructure projects in the poorest countries.

This new Commission is bringing together 10 UK and international business leaders to make recommendations on how the UK government, UK businesses and the City of London could work together even more closely to drive investment in the developing world, while also promoting lower carbon and better value-for-money infrastructure.

Gregory Hodkinson, with 40 years of experience in civil infrastructure and transportation projects worldwide and previously the chairman at the global infrastructure firm Arup, is chairing the commission.

It will make recommendations on how the UK government can encourage more private sector investment into infrastructure in developing countries alongside UK aid.

It will support developing countries to improve their infrastructure while also helping to create our trading partners of tomorrow after we leave the European Union.

British engineering feats – from the Clifton Suspension Bridge to the London Olympic Stadium – showcase the UK as a global leader in creating infrastructure.

And we must take this even further.

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