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Report Highlights Role of Industrialization in Africa's Response to Global Shocks
A new report from the Africa Finance Corporation emphasizes using existing capital for local processing of resources to boost infrastructure. It points to recent examples like Aliko Dangote's refinery amid the Iran war's fuel price impacts. Governments in several countries are establishing funds to support such development.
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A report by the Africa Finance Corporation states that developing infrastructure across Africa depends on utilizing existing capital for local processing of fuel, fertilizer, and metals, rather than seeking new funds. The organization hosted an event in Nairobi last week, where plans for an East African mega refinery were announced.
Capital held by African institutions increased to more than $2 trillion from over $1.6 trillion a year ago, partly due to higher gold holdings in central bank reserves amid record prices.
“The key issue isn’t the size of windfalls but whether they’re effectively utilized to mobilize domestic capital into infrastructural and industrial systems," Fola Fagbule, AFC’s deputy director and head of financial advisory, said.”
Late last year, Kenya and DR Congo announced the creation of similar funds to capture proceeds from selling government stakes in public assets and mining revenues, respectively. Key challenges to expanding industrialization include ensuring stable power supply, which remains inconsistent in much of the continent, and maintaining political commitment to long-term projects that extend beyond election cycles.
