Investment is a major driver of long-run growth and development. It is necessary to build productive capacities, transform the structure of economies, generate employment and reduce poverty.
Over the past decade, African countries have had relatively good economic growth performance. But average investment rates on the continent remain low relative to what is considered necessary to achieve national development goals. They are also low relative to the average rate for developing countries. These facts suggest that Africa’s recent growth may be fragile and that it is unlikely to be sustained in the medium to long term if current trends continue. The key question, then, is how can African Governments catalyse investment for sustained and transformative growth?
The Economic Development in Africa Report 2014, subtitled Catalysing Investment for Transformative Growth in Africa, addresses this issue. It underscores the need to enhance the contribution of investment to growth through boosting investment rates, improving the productivity of existing and new investments, and ensuring that investment goes to strategic and priority sectors deemed crucial for economic transformation. It also stresses the importance of strengthening linkages between local and foreign enterprises, stemming capital flight to release more resources for investment, using aid to stimulate investment and fostering international trade to boost investment. In each of these areas, the report emphasizes the need for policy coherence at the national and international levels.