AIF2021: Unlocking the investment portfolio in Africa

29Nov 2021
Angel Navuri
The Guardian
AIF2021: Unlocking the investment portfolio in Africa

The African continent has for long been depicted as a sleeping giant despite of its potential to turn into global player.

The continent has diverse human and mineral resources with the potential to produce inclusive growth and eradicate poverty in the region but low levels of technology coupled with low levels of investments in key sectors has made the continent lag behind.

Experts have already predicted that the African market will be one of the world’s fastest growing markets in a few years with market of over 1.2 billon people.

With the continent creating an entirely new development path, harnessing the potential of its resources and people remains key

The COVID -19 pandemic however left many African countries vulnerable as it not only affected key sectors like tourism but also Foreign Direct Investments (FDIs).

 FDIs to Africa declined by 16% in 2020 to USD40 billion as the COVID-19 pandemic continued to have a persistent and multifaceted negative impact on cross-border investment globally and regionally, according to the World Investment Report 2021 published by the United Nations Conference on Trade & Development (UNCTAD) in June this year.

The FDI downturn in 2020 was particularly severe in resource-dependent economies due to low prices and dampened demand for energy commodities. Amid the slow roll-out of vaccines and the emergence of new COVID strains, significant downside risks persist for foreign investment to Africa.

On this regard, the African Development Bank seeks to unlock the Investment Portfolio in Africa during the Africa Investment Forum that will be held in Abidjan, Côte d’Ivoire from 1-3 December 2021 under the theme, “Accelerating transformative investments in Africa,”

According to the Africa Investment Forum Senior Director Chinelo Anohu, “Agriculture is one of the pillars of the African economy: it is the key employer, and is fundamental to transforming rural areas, reducing poverty, and facilitating economic growth,”

Anohu noted that the agriculture sector has been under-supported by investment to date, and the Africa Investment Forum’s vision is to make it a catalyst for significant investment and enable it facilitate growth over the next decade while improving productivity and incomes in an equitable and sustainable manner.

During the Africa Investment Forum (AIF) roundtable event held on October 7, 2021 two agribusiness deals worth nearly $400 were previewed by the AIF team presented with an outline of the deals to investors.

Agriculture and agri-business is one of five priority investment sectors under the Africa Investment Forum’s Unified Response to covid-19 pillars in addition to energy and climate change, health, ICT/Telecoms, and industrialization and trade.

The first deal that requires $345 million in capital, entails construction and operation of a food market that will serve about 15 million people in an area projected to be Africa’s largest food exchange zone. It would also serve as a marketplace where farmers bring in produce to sell to potential customers at retail or wholesale prices and the food market will provide livelihood opportunities for fishers, meat and dairy producers and wholesalers.

The second deal showcased involves the scaling up of a $50.2 million dairy milk production and packaging company in a Southern African Development Community (SADC) country. The project sponsors have a good operational record in the agriculture sector, and they have secured an off-take agreement with a major international food and beverage company for the milk production. The deal has strategic value for the national government, and provides an opportunity for local production of a commodity that is typically imported with potential for job creation and local development of skills.

Already the African Development Bank’s Africa Investment Forum team previewed several likely boardroom deals in investor roundtables for potential investment that included the construction of a $45 million World Health Organization-prequalified vaccine production plant in East Africa. The plant will be able to routinely produce three types of vaccine, including one for Covid-19.

The Forum will also revisit the achievements and highlights from the second edition, held in Johannesburg in 2019 where fifty-seven deals worth roughly $68 billion were discussed, including a strategic Liquefied Natural Gas development project in Mozambique, which represents Africa’s largest single foreign direct investment.

As many countries focus on increasing investments, development of the private sector is indispensable in providing the scale and speed needed to urgently address bottlenecks across many sectors in the region.