The current mismatch between capital seeking profitable ventures and the chronic deficit of large-scale investments in Africa can be addressed through closer collaboration with institutions such as the World Bank Group.
This was said by President Paul Kagame on Tuesday during the opening of a two-day Development Finance Forum hosted by the World Bank Group in Kigali.
Kagame said that despite the strong prospects in Africa in regards to investment opportunities, there exists a mismatch between capital seeking investment and large-scale investment funding.
“In the global context, there is an excess of capital looking for profitable ventures such as these as we all know. Yet in Africa, there is a chronic deficit of large-scale investment funding. That is what we are here to address in practical terms,” he said.
To make up for the mismatch and change status quo, the President called for close collaboration with the World Bank Group.
The Group’s private sector support arm International Finance Cooperation, and Multilateral Investment Guarantee Agency, which offer targeted interventions to change status quo such as risk guarantee facilities.
“We still have a long way to go but the direction of travel is clear and the necessary partnerships are increasingly in place. Among the most important is Africa’s partnership with the institutions that make up the World Bank Group,” he said.
Kagame, who is also African Union chairperson, called on countries to make the most of the organisation’s expertise in aspects such as regulatory reforms and private sector development.
“The heart of the Bank’s ‘Maximising Finance for Development’ perspective is that public development funding is increasingly scarce and that prosperity is generated when government and business are working well together,” he said.
The head of state expressed optimism on the prospects of increased investment in the region owing to increased integration.
“Business climate reform has been a central preoccupation of ours for more than a decade. The same principles are at work in East Africa where we have a One Area Network, an integrated customs architecture and ambitious plans for regional infrastructure,” he said.
He also noted that increasingly, there is public-private sectors collaboration which is driving initiatives such as the Continental Free Trade Area agreement signed in March.
The collaboration has seen the private sector feature in African Union summits to provide a business perspective.
“Public-private collaboration is also the driver of recent achievements at the level of the African Union particularly the Continental Free Trade Area. The inclusion of business leaders at African Union Summits is now routine and that is making a difference to the quality of dialogue,” he said.
Axel van Trotsenburg, World Bank Development Finance Vice-President, said that the financier was ready to support the continent to increase private investment as it in turn lead to job creation.
He said that the Group has committed over $50b to the continent over the next three years.
The summit has attracted business leaders, financiers and policymakers to discuss ways to accelerate access to finance for investments in housing, agribusiness and tourism in East African Community (EAC).