More than one in eight people on earth live in Africa. More than half of these men, women, and children live in abject poverty. The continent attracts less than 1 percent of global capital flows and accounts for less than 1 percent of world trade. Africa’s economic isolation has deep implications for world stability, commerce, and, indeed, humanity. While these challenges are daunting, with appropriate action and commitment, global capital flows into Africa can be enhanced significantly. This potential reaffirms that Africa’s challenges do indeed have solutions. The obstacles are rooted not in questions of global capacity but of global will.
Recently, increased attention has been paid to Africa’s plight. Numerous efforts are underway to address the HIV/AIDS pandemic. Many learned opinions exist for enhancing support to Africa from multilateral institutions and the wealthiest nations. Yet very little work has been done on how to increase private-sector capital flows to Africa. Given the relative paucity of effort in this crucial sphere, the Commission on Capital Flows to Africa chose to focus on this essential and largely missing link to the region’s stabilization and long-term economic security.
This commission represents a unique effort to unite high-level leaders from top economies and Africa, including individuals with significant experience in government, nonprofi t organizations, and the private sector, to focus specifically on attracting sustainable and adequate capital investment.
After a year’s work, we are pleased to make our recommendations in this report. We find several reasons today to support Africa’s development. One of them is the New Partnership for Africa’s Development that represents a broad and growing commitment among African leaders to establish the indispensable preconditions for investment. Also, leading countries around the globe are pledging greater economic and development assistance, including the Bush Administration’s Millennium Challenge Account, which proposes to increase US global bilateral assistance by about 50 percent. This commission endorses these efforts and believes that if African leaders are successful in their attempts to build an environment conducive to attracting capital, then the United States, the G-8, and OECD governments are duty bound to respond with significant new public investments. Private investment will then follow.
The commission is well aware that increased private capital flows are but one of the many challenges that Africa faces. We are confident, however, that increased capital flows can contribute significantly to Africa’s development and that the US government, together with the G-8 and OECD nations, could do much to stimulate and facilitate these flows. The budgetary costs to the United States of what we have suggested would be modest and more than offset as Africa becomes a stronger trading and investment partner. Moreover, we believe that these proposals would pay major dividends in terms of advancing US humanitarian, foreign policy, and national security interests.
This report represents the shared effort and commitment of 28 African, European, Asian, and American men and women, who are leaders in commerce and government, who gave freely and generously their time and collective wisdom, and who personify the promise of a world more closely bound together by commerce and capital. While we did not agree on each recommendation, our report is stronger for the vigorous dialogue that it produced.
I am grateful to the members of this commission for their dedication to this effort and for the excellence of their work. Now, time is of the essence. Africa can be an attractive destination for investment if real steps are taken both in Africa and in leading economies. Capital flows are a powerful force for global stability and for creating opportunities. They can and should be unleashed today to the benefi t of Africa and, through its renewed stability and health, to the benefit of our world.
James A. Harmon
Commission on Capital Flows to Africa
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