Mobilising capital for Africa’s economic growth tied to PPP initiatives

As various governments across Africa struggle for funds to execute projects that will leapfrog their economies, a panel of experts at the ongoing World Economic Forum in South Africa have said that until the respective African countries establish strong partnerships for pooling capital necessary for productive purposes, the expected growth will remain elusive.

Discussing ‘Catalysing capital for Africa’, especially in the face of infrastructure deficit at the second day of the global forum, the panelists strongly believed that partnerships with the private sector regarded as engine of sustainable economic growth is critical to achieving the desired economic push. “Governments must find ways of pooling capital for productive use”.

One of the panelists, Nathan Kalumbu, the President of Coca Cola, Eurasia and Africa, who sees significant progress in infrastructure development across African economies, however said more still needed to be done in some areas such as transport, electricity, education among others.

In order to navigate through the transportation issues, Kalumbu said Coca Cola set up micro distribution channels in the local communities. The Micro Distribution Center (MDC) model in Africa has created jobs, promoted entrepreneurship and strengthened local economies. Currently, in Africa there are more than 3,200 MDCs that employ over 19,000 people, generating more than $950 million in annual revenue.

The MDC model identifies and engages independent entrepreneurs, many of whom are women, that distribute and sell Coke beverages in small, specific geographical areas. MDCs are typically located in areas where a lack of stable roads and infrastructure makes it difficult for delivery trucks to travel, which helps the company secure hard-to-reach markets while creating wealth and job growth in those communities.

“As we continue to strengthen our value chain, we also strengthen the communities by giving them access to our value chain, a partnership that has worked”

Kalumbu who said there are various challenges in Africa that cannot be resolved by single entity maintained that PPP arrangement is critical factor in addressing the challenges.

Identifying 65 percent of African population as below 35 years, Kalumbu said tapping the resource of this young population requires collaboration among public and private stakeholders.

In his view, John Rwangombwa, the Governor of Central Bank of Rwanda who spoke from the perspective of public sector also agreed on the strength of public private partnership in financing projects for economic development.

Specifically looking at the role of the public sector, Rwangombwa said government, first, must create the enabling environment, address reforms that create impediments to private sector in doing business, deal with requirements for easy start of businesses and provide necessary infrastructure.

He said in Rwanda, the government has successfully set up clear framework for public private partnership.

Rwangombwa also emphasized on the need to build the capacity of locals in engaging with fund managers as a veritable tool of catalyzing capital for Africa as investors are always frustrated with people who don’t understand the issues. He also said dealing with corruption is a major factor in catalyzing funds.

Recognizing that there are still barriers in Africans investing in Africa, the Rwandan central bank governor canvassed for free movements of people and capital. “If you want to attract international capital you also need to deepen your capital market and allow domestic debts by foreign firms”, he said.

DANIEL OBI in Cape Town