The Africa Development Bank (AfDB) will establish the Africa Investment Guarantee Agency that will comprehensively cover international investors against political, climate, and macroeconomic risks.
- The plan was divulged during the World Governments Summit in Dubai, where African executives lamented that Africa’s business risk index was unfairly presented – hindering a stream of investors.
- The Investment Guarantee Agency will adopt the function held by the World Bank’s Multilateral Investment Guarantee Agency (MIGA) that shields global investors from business losses associated with risks in the continent.
- The idea of a continental agency providing non-commercial investment guarantees goes back 15 years, after it was first proposed by economist Joseph Atta-Mensah.
According to the president of the AfDB, Akinwumi Adesina, Africa’s reputation as a volatile ground unworthy of massive investment was a stereotype that is not based on a clear assessment of prevalent risks.
“Africa’s risk is not different from any part of the world. We actually asked Moody’s Analytics to look at the risk profile of Africa, of investments and infrastructure over the last 14 years. The rate of loss in Africa is 1.7%,” Adesina said, comparing it to Latin America’s 13% and Eastern Europe’s 10%.
Nigerian businessman, Tony Elumelu who regarded the continent as resource-rich but plagued with a scarcity of investors because of botched perceptions, holds similar sentiments.
“You may decide to see risks or challenges, or you may see opportunities. But ability to identify opportunities and structure your approach in a way that addresses and mitigates those risks confers extra competitive advantage on you and your business,” Elumelu said, “There’s nowhere else we get the kind of returns on investments as what we make in Africa.”
Despite high-demand minerals and being home to a young population, the continent remains incapable of optimizing these resources for the benefit of its citizens. In many cases, countries with a potential for immeasurable wealth such as the DRC, are faced with political instability thus unable to protect their resources from exploitation by foreign powers.
According to the Chief Minister of Sierra Leone, David Sengeh, the continent should strive to change the ‘resource curse’ perception by pursuing tripartite favourable deals that benefit investors, governments, and local communities – each with a role to play in the stimulation of progress.
