The transformation of Africa and its development needs a shift of investment and equity to real economy with a special focus on SMEs-SMIs which constitute the essential element of the continent's economies, argued Tuesday in Marrakech, African policy makers and development experts in the debates of the 9th edition of the African Development Forum (ADF-IX).
This belief was widely shared at a roundtable debate on "Innovative Policies for a changing world" where participants expressed their views on the complex issue of development financing and the difficulties of African policy makers to mobilize the necessary resources to carry out development programs in employment generating sectors and wealth.
Mr. Juan Somavia, Advisor to the Secretary General of the United Nations for Political Cooperation States, said that with the global crisis of 2008, the economic model of the past 30 years proved to have its limits and is unsure as for these essential principles with the ability of markets to self-regulate and containment of States’ and governments’ regulatory prerogatives.
In a deregulated market, equity and investment funds poured on speculative activities that became more important than the investment in the real economy, he noted, asserting that we cannot recover from the crisis with an economic model that generated the same crisis.
It should also be noted that in case of Africa, it is important to reverse this trend and think of a development model that provides funding for the real economy and direct equity to productive sectors, through incentive strategies to these areas and restrictions on speculation.
African policy makers must also ensure that foreign investment through major companies meet the needs of the sustainable development of African economies in the context of win-win partnerships, he recommended.
Similarly, Dr. Carlos Lopez, Deputy Secretary General of the United Nations and Executive Secretary of the Economic Commission for Africa (ECA), called for a focus on investing in the real economy that creates employment and strengthen the middle class that generates two-thirds of growth through internal consumption.
The African policy makers’ effort should take up this target as a focus by promoting the flow of investments into SMEs- SMIs, the best way to ensure equitable growth for the creation of employment and wealth distribution.
It is also worth noting that the major financial crisis of 2008 and its impact on current global financial landscape and business models brought however, a new positive trend in Africa. The 1/3 of the continent’s trade exchange take place now between African countries and this trend will continue over the next decade to reach 60 to 70 per cent of trade exchange.
With changes in the financial sectors at the international level to the obvious involvements on the geopolitical landscape, Africa must take advantage wisely of this situation for better repositioning in the global economy.