The World Bank has warned rich countries against
cutting development assistance to African countries,
amid growing fears of further global economic
"The temptation is great when a crisis
looms – as it does now – for rich
countries to slash development
assistance. This would be a grave
mistake," World Bank Vice President for
Africa - Obiageli (Oby) Ezekwesili told
investors last Thursday in London.
Speaking at the first African Investment
Summit organized by the London Stock
Exchange (LSE) in partnership with the
Financial Times, CNBC, Citigroup, Banco
Espirito Santo, among others, Oby
stressed that cutting aid would be a
grave mistake "not because Africa is
desperate for aid, but because the
global economy is desperate to see a
An expansion in global prosperity and a resumption of
global economic growth, she explained, really
depends on Africa playing its role as a global
growth pool and prospering as a robust market for
global goods and services.
Oby spoke shortly after she had officially declared
the opening of day’s trading on the floor of the
Upon arrival in London a day earlier, Oby had said
she hoped fears over a potential global recession
would ease, triggering investments in Africa and
soothing financial markets roiled by the euro zone
debt and American budget crises.
Speaking to a group of 125 investors estimated to have
holdings of about $120 billion at the LSE and with
growing portfolios in Africa; Oby spoke of the sheer
abundance of investment opportunities in Africa,
urging investors still hesitating to take a bet on
the continent to do so without further delay.
"Today is the day for African. Tomorrow may be too
late," she said, citing the example of an unnamed
European firm which turned down the offer to invest
in Nigeria’s telecommunications sector.
Nigerian telecoms sector, which previously appeared
unattractive to the European investor has within the
last decade exploded from a mere 500,000 phone lines
to 80 million phone subscribers, while the
continent’s phone density rose from 10 million lines
to over 400 million.
She said the "exciting, new Africa" she is inviting
investors to take a bet on is "at a time of
unprecedented opportunities for transformation…
standing on the cusp of a revolution similar to the
ones that transformed China and India".
"Africa is the now, no longer the future," Oby said,
urging any CEO who has not yet presented an Africa
strategy to their Board of Directors to do so. "Any
global player that continues to ignore Africa does
so at their peril."
The UK Secretary of State for International
Development, Andrew Mitchell, who spoke at the same
summit on the challenges Africa still faces,
reiterated his government’s support for Africa’s
Investors, Oby pledged, will find in the different
branches of the World Bank, the global knowledge
they need to understand Africa; the political risk
guarantees certain markets may impose; and the
support all investors sometimes need in resolving
international investment disputes.
While foreign partners like the World Bank and foreign
investors can help, "the ultimate responsibility for
delivering on Africa’s development promise is that
of the peoples of Africa and their governments," the
World Bank Vice President told the summit.
She explained that the World Bank’s Strategy for
Africa commits to fostering partnerships "…working
with Africa, not for Africa… partnering with and
challenging African governments to embrace
much-needed second generation reforms that boost
private sector-led growth by improving the
environment for doing business".
"We will continue to support efforts to
build the foundation for good governance
and grow public sector capacity across
Africa. We will support programs that
improve the continent’s economic
competitiveness; as well as its ability
to embark on and sustain broad-based,
inclusive, and job-generating growth. We
will support efforts to build African
economies that are resilient to shocks
and are protective of the most
vulnerable segments of the continent’s
population," the World Bank’s Africa
chief reassured the global capital
Time to Invest in Africa and Africa’s Capital
The call by the World Bank last Thursday at the London
Stock Exchange (LSE) for investors worldwide to
invest in Africa and its budding capital markets,
could not have been louder and stronger. "Africa has
taught the world a lesson in macroeconomic reform
and stability," she said.
She urged investors who are in search of the right
market at a time of growing fears of a global
recession to "rediscover Africa".
"Africa’s fundamentals appear strong, and the
continent’s outlook remains positive," Oby said,
pointing to the continent’s rapid rebound from the
2008-2009 global financial crisis and its higher GDP
growth rates projected to be 4.8 percent, 5.2
percent and 5.5 percent respectively in 2011, 2012
It makes business sense to bet on Africa’s capital
markets, Oby said, at a time when "global equity
markets are headed for their worst quarter since
2008", and returns on investments in Africa are
among some of the best anywhere in the world.
She cited a recent study by Oxford University
Professor - Paul collier, which found the return on
capital for over 950 African enterprises to be on
the average 11 percent higher than in Latin America
and Asia, and 70 percent more profitable if compared
against similar Chinese firms.
Capital is flowing to Africa, the World Bank Vice
President explained, because the continent has
become a friendlier and more profitable market,
about which businesses, consumers, investors and
development partners are all bullish.
Investors who joined the flight for quality at the
onset of the 2008-2009 global crisis can now
testify, Oby argued, that "Africa stayed stable"
even as the global stock exchanges went on a wild
roller coaster ride.
The recovery of African stock markets came fast,
despite the fact that their limited liquidity and
relative small size was amplified.
While initial hopes that investors – weary of markets
in developed countries, would seek opportunities in
Africa and other developing regions were misplaced,
most African stock markets with the exception of the
Johannesburg Stock Exchange have been growing
robustly, doubling their market capitalization
between 1992 and 2002, from $113.4 billion to $244.7
In a move that is likely to set a new record, the
Lagos Stock Exchange, the region’s fastest growing
market, plans to bring its current capitalization of
$40 billion to $1 trillion in five years.
According to Oby, "one of the key lessons of the past
global crisis is that Africa knows how to shrug off
"Been there, done that," was the attitude she said
African finance ministers who attended the September
23-24 Annual Meetings of the World Bank and IMF in
Washington, DC, had on being told that news of a
potential global crisis meant even more reforms on
One explanation of Africa’s success is the region’s
sustained pace of meaningful reforms. As many as 36
of the 46 African countries surveyed by the ‘Doing
Business Report’ have implemented major reforms over
the last five years, including those whose ranking
has slipped or has not improved.
Oby said the continent of which she speaks is "an
exciting, new Africa… on the cusp of an economic
revolution similar to China’s and India’s".
She described it as a region of abundant opportunities
in agriculture, agribusiness and agro-processing;
with strong demand for capital in infrastructure
development; but also a region in need of a second
round of investments to upgrade the ICT sector,
expand broadband use, mobile banking and internet
She called on financial capital to help itself, by not
focusing too narrowly on making the fast buck, but
on building social accountability, transparency, and
fostering the fight against corruption, and promote
corporate social responsibility.
Global financial capital can help to develop the human
capital and labour market skills that will be needed
if the "new Africa" is to lure some of the 85-to-90
million labour intensive jobs in light
manufacturing, which wage pressures will force firms
in China to take off-shore in the next three-to-five
Africa, oby said, needs to replicate the knowledge
that enabled policy reforms to precede efficient
public investments before private capital, helped
turn a loss-making sector such as telecommunications
into the ICT revolution the continent has witnessed.
Strengthening Africa’s capital markets whose success
is intrinsically linked to the economic success of
the continent is essential if Africa is to fulfil
its vast potential, said Bill Mills, CEO of Europe,
Middle East, and Africa at Citigroup, one of the
co-sponsors of the summit.
The CEO of the London Stock Exchange and Vice Chair of
the World Federation of Exchanges, Xavier Rolet,
whose speech to the summit focused on what
international partnerships can do to strengthen
sub-Saharan Africa’s capital markets, described Oby
as the one person alive who has done the most to
improve lives in Africa.
Oby pledged World Bank’s support to continue to help
African governments embrace the right reforms, build
the right institutions, make the right public
investments, grow the resilience of their economies
to shocks and make the right policy choices,
including; diversifying their economies, developing
the private sector and protecting the poor and most
vulnerable in a time of crisis.
"Nobody really knows for certain the extent of the
effects of the crisis on the most fragile,
debt-ridden and budget-strapped economies," Oby said
even when a global crisis hits Africa, some of the
most effective mitigating effects would come from
leaders not taking their hands off the reins of
reforms but also from stronger growth in countries
like South Africa and Nigeria, as well as from a
return to growth after violent conflict in Cote
As she left the LSE at the close of business
Thursday, the board was lit in green. The market had
rallied, closing 3.7 percent up, extending gains
seen on Wall Street and in Asia the day before. The
gains of the day prompted one senior LSE official to
joke that Oby needs to return to open trading more
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