1887

n Journal of Public Administration - NEPAD : an opportunity for small and medium enterprises and entrepreneurs in Africa : viewpoint

Special issue 1
  • ISSN : 0036-0767
USD

 

Abstract

One of the features of NEPAD is to accord high priority to the role of private investment and trade. With regard to private investment, NEPAD stipulates the following;

  • NEPAD focuses on debt reduction and Official Development Assistance (ODA) as complementary external resources required in the short to medium term, and addresses private capital flows as a longer-term concern.
  • The basic principle of improved governance is a requirement for increased capital flows, so that participation in the Economic and Political Governance Initiatives is a prerequisite for participation in the Capital Flows Initiative.
These two points of NEPAD are very relevant. With regard to the inter-relation between economic growth and private investment, the World Bank statistically illustrates in its report that, whereas African growth reached a peak of 5,5% in 1973, the ratio of investment in terms of GDP remained at just under the 30% level. Since 1973, African economic growth has been declining over time, until in 1994 it bottomed with growth of only 1%. Parallel to this trend in economic growth, the investment GDP ratio was reduced to 5% in 1994. However, the trend was then reversed to some extent. In 1997 economic growth climbed back to 3,5%, while the investment GDP ratio reached 19%. It is estimated that a rate of 7% annual growth is essential for the sustainable development of Africa and to attain this, the investment GDP ration should be at least 30%. This means that Africa needs additional Foreign Direct Investment (FDI) flows from outside amounting to as much as 11 to 12% of GDP annually to fill the gap between the targeted 30% and the current 18-19% level of GDP. This needed FDI flow amounts to a figure of US$64 billion.

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/content/jpad/37/si-1/EJC51277
2002-11-01
2016-12-10

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