African countries have been urged to tap into the US$5 trillion sovereign wealth assets belonging to oil-exporting developing countries and China, according to participants at the just-ended UNCTAD XIII meeting in the Arab Gulf State of Doha.
“Of the US$5 trillion, only about US$110 million goes into Foreign Direct Investments; these vast quantities of funds present an opportunity for Africa to accelerate development, strengthen economies, create jobs and improve the lives of our people,” the private Guardian newspaper Thursday quoted the participants as saying.
The Doha discussions came in the wake of increased interest in Africa’s investment potential, fuelled in part by the commodity boom, economic growth and improved macro-economic governance.
In addition, with progress towards the creation of a Continental Free Trade Area (CFTA), prospects remain higher than ever, that the continent can significantly boost intra-African trade.
The session noted that regional integration was on the rise, as evidenced by the increased trade within the East African Community (ECA), Common Market for Eastern and Southern African and Southern African Development Community (SADC), adding that this presents opportunities for minimizing fragmentation of economies.
Economic Commission for Africa (ECA) head of the Africa Trade Policy Centre in Addis Ababa, Ethiopia, Alan Kyerematen, projected that a CFTA would create a market of about one billion people.
“This is significant in that it can help to change the current dynamics, in which countries are simultaneously members of multiple Regional Economic Communities (RECs),” he said.
Apart from fostering greater collaboration and cooperation among the RECs, the CFTA also has the potential to improve collective action to develop regional infrastructure and consolidate regional markets.
This would be enhanced by improved inter-connectivity in all forms of transport and communication, as well as through the promotion of energy pooling to strengthen the regions’ competitiveness.
The global financial crisis has made it less attractive for Sovereign Wealth Fund (SWF) countries to invest in unstable stock markets. According to the participants, these funds are best placed for more long-term investment, which is in line with the characteristics of development-enhancing investment projects.
The session underscored the need for adequate policies and international cooperation to reduce the obstacles to SWF investment flows