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Time to Invest in Africa-World Bank

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BY Our reporter

newsdesk@greatlakesvoice.com


LONDON, October 11, 2011The World Bank’s Vice President for Africa Obiageli Ezekwesili called Thursday from the London Stock Exchange for investors worldwide to invest in Africa and its budding capital markets.

“Africa has taught the world a lesson in macroeconomic reform and stability,” Ezekwesili told the audience at an African Investment Summit hosted at the Stock Exchange.

She urged investors who are in search of the right market at a time of growing fears of a global recession to “rediscover Africa”.

“Africa’s fundamentals appear strong, and the continent’s outlook remains positive,” Ezekwesili said, pointing to the continent’s rapid rebound from the 2008-2009 global financial crisis, and its higher GDP growth rates projected to be 4.8 percent, 5.2 percent and 5.5 percent respectively in 2011, 2012 and 2013.

It makes business sense to bet on Africa’s capital markets, she said, at a time when “global equity markets are headed for their worst quarter since 2008”, and returns on investments in Africa are among some of the best in the world.

Ezekwesili cited a recent study by Oxford University Professor, Paul Collier, which found the return on capital for over 950 African enterprises to be on the average 11 percent higher than in Latin America and Asia, and 70 percent more profitable if compared against similar Chinese firms.

Capital is flowing to Africa, the World Bank vice president explained, “because the continent has become a friendlier and more profitable market, about which businesses, consumers, investors and development partners are all bullish.

Investors who joined the flight for quality at the onset of the 2008-2009 global crisis can now testify, Ezekwesili argued, that “Africa stayed stable” even as the global stock exchanges went on a wild roller coaster ride. Recovery on African stock markets came fast despite the fact that their limited liquidity and relative small size was amplified.

While initial hopes that investors – weary of markets in developed countries – would seek opportunities in Africa and other developing regions were misplaced, most African stock markets with the exception of the Johannesburg Stock Exchange have grown robustly, doubling their market capitalization between 1992 and 2002, from $113.4 billion to $244.7 billion.

In a move that is likely to set a new record, the Lagos Stock Exchange, the region’s fastest growing market, plans to bring its current capitalization of $40 billion to $1 trillion in five years.

According to Ezekwesili, “one of the key lessons of the past global crisis is that Africa knows how to shrug off the impact”.

“Been there, done that”, was the attitude she said African finance ministers who attended the September 23-24 Annual Meetings of the World Bank and International Monetary Fund

Ezekwesili pledged World Bank support to continue to help African governments embrace the right reforms, build the right institutions, make the right public investments, build the resilience of their economies to shocks and make the right policy choices, including diversifying their economies, developing the private sector and protecting the poor and most vulnerable in a time of crisis.

 

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