This article is from the recent Business Action for Africa publication, "MDGs at the Mid-Point: Accelerating Business-Led Growth and Collective Action". To download the full report, click here.
The Investment Climate Facility for Africa (ICF) is the only pan-African body, based in Africa, explicitly and exclusively focused on improving the continent’s investment climate. ICF was formally launched in 2006 on the back of increasing recognition that an improved African investment climate is fundamental for wider economic growth, job creation and improved prosperity. Thus, there is little doubt that our remit is inextricably linked to the Millennium Development Goals.
We are not alone in the view that an improved investment climate is central to Africa’s wider economic and social progress; indeed as an organisation we have received widespread support and funding from a range of private companies, development partners and governments. Likewise, we have been encouraged by the appetite for reform demonstrated by the African governments we are currently working with and are pleased to report we already have a high quality and robust project portfolio. ICF is engaged geographically in Rwanda, Liberia, Lesotho, Senegal and Tanzania, as well as in two regional projects in East and West Africa (with another planned in Southern Africa).
Africa is a continent ripe with investment potential, despite the media’s focus on natural disasters, conflict and poverty. All too often ‘Africa’ is considered shorthand for 54 countries, with difficulties in one country assumed to cover the whole continent. Instead, it is important to remember that each country in Africa has different investment opportunities, infrastructure, resources and levels of political and economic stability. In contrast to the many stereotypes that exist about Africa as a place to do business, the continent has booming stock markets, a billion consumers, large reserves of natural resources, accelerating economic growth and real entrepreneurial talent. Certainly challenges do exist to doing business in Africa (as they do in many other regions of the world), but it is getting easier and there are immense opportunities and rewards available for those willing to invest in the continent.
It is my strong belief that the majority of new jobs and income Africa so keenly needs will come from small and medium enterprises (SMEs). They play a vital role in economic growth - not least through job creation, helping to diversify the economy and collectively making a significant contribution to trade and exports. SMEs are also key to the long-term sustainability of the private sector on the continent. It is the underexploited potential of Africa’s SMEs that makes them so vital to economic transformation. Unfortunately, a weak or less conducive investment climate will hit SMEs harder than large companies. ICF aims to improve the business environment, thereby making it easier for SMEs to grow and thrive.
The challenges to doing business in Africa are clear and well documented; the solutions will depend on a collaborative approach between business, government, development partners and civilians so that the bottlenecks and barriers to running a successful, thriving business can be overcome. We recognise that improving Africa’s investment climate is a significant undertaking, but as we succeed in making Africa an even better place to do business, the benefits for civil society and Africa as a whole will be enormous.
Omari Issa is Chief Executive Officer of the Investment Climate Facility.