Africa has the opportunity to quadruple living standards by 2040, but to do so it will need to find additional investment amounting to $11,4-trillion.
That is the key finding of a Capital Economics report commissioned by Jersey Finance.
While Africa has 15% of the world’s population, it generates just 4% of global output. But the Capital Economics report argues that Africa is on the verge of a demographic dividend. While other continents face ageing populations, Africa’s working age population is expected to double to 1,2-billion over the next 30 years.
To support this and quadruple gross domestic product by 2040, Capital Economics calculate that Africa will need to invest $85-trillion, about 100% of current annual global gross domestic product. At current levels of investment, it will fall $11,4-trillion short of that. Capital Economics estimate that, combined, aid, domestic profits and local governments will only be able to plug 48% of this gap.
The remainder – $6,1-trillion – will have to come from foreign direct investment.
Mark Pragnell of Capital Economics and principal author of the report, comments: “The continent must address its lack of infrastructure, buildings, machinery and other physical capital. Its capital stock will need to increase six fold by 2040 if it’s to realise its potential. It will require a cumulative investment of $85-trillion – equivalent to one year’s gross domestic product for the entire world – by then.”
Geoff Cook, CEO of Jersey Finance, says: “IFCs have a fundamental part to play in facilitating foreign direct investment, of which a substantial amount is needed if Africa is to fulfil its economic potential. As such Jersey is in a prime position to offer the continent the assistance it needs – from access to a greater amount of investment funds to establishing environments conducive to entrepreneurship – Jersey can offer a safe business environment while ultimately helping Africa fulfil its economic potential.”