The financial crisis threatening developed economies could slash capital investment into Africa, says World Bank chief economist for Africa, Shanta Deverajan.
"The most damaging effect potentially is on capital flows. You know well that Africa has seen very strong growth in foreign investment in the past six years," he told journalists in a briefing from the bank’s Washington headquarters.
"Now there is a risk that if there is a really difficult financial crisis in the United States and Europe and risk aversion rises, it is possible these capital flows which have fuelled growth in Africa will fall. It will be a very, very serious problem for the continent," he said.
According to Bank of America, foreign direct investment to Africa doubled to $315 billion between 2000 and 2006.
"We are in a virtually unprecedented situation in the African continent. Africa’s growth rate is around the same as other developing countries, except for China and India, for the first time in 30 years.
"There are some investment projects which are not profitable enough, which are not positive enough, which one should perhaps scale back or alter. But at the same time it is necessary to seek other sources of finance, either from other countries or at a domestic level," Devarajan said.
Ministers, government officials, and investors will all be gathering in Cape Town between 19th and 21st May 2009 to discuss, among other things, how to prevent the worldwide financial situation from affecting investments into the African power sector. Power Indaba 2009 is an executive two day conference and meeting forum for ministerial delegations, high level power executives, policymakers and international financiers to tackle investment issues head-on. Comprehensive, interactive panel discussions and round table meetings will cover how African countries can continue to attract and fast-track financing for power projects. Networking opportunities will highlighting real business opportunities in one of Africa’s most vital sectors.
This event is the only one of its kind in Africa with a specific focus on investment in the African power industry. It is the African continent’s best resource for up-to-date information on financing and new business within the sector.
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