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Submitted by Muyiwa Akinyosoye on
Africa as the new BRIC......? While it’s been noted in many World Bank reports that the key to unlocking Africa’s underdevelopment is through infrastructure development, much remains to be done in the area of financial support. Arguments can swing either way on how this support should be channelled. While some continue to favour aid from richer countries in the form of bilateral and multilateral aid, others are in favour of Africa doing all on their own. Whether one agrees or not, multilateral and bilateral donor aid continues to play a vital role in Africa’s stride towards development. Being able to ascend and even surpass countries that constitute today's BRIC will involve aggressive and innovative investment strategies. Africa has what it takes, the question is, is she willing to grasp opportunities that come her way? Though aid remains one path through which funding can help drive infrastructure growth and development, the amount required for accelerated economic growth remains well in excess of current needs. According to a World Bank report, the private sector has been credited the best medium to bridge the funding gap the continent is currently experiencing. Implicit in the report is the suggestion that private investment should come in the form of Public-Private Partnerships. While there are merits in this argument, a number of risk factors serve as a deterrent to this strategic direction. The private sector will remain reluctant, to a large degree, in investing in regions of the world where there are risk factors well in excess of their managerial ability. Political instability and economic uncertainties rank highest amongst these factors. Without any doubt, private sector involvement is still the way to bridge the gap. Gaining the right level of confidence towards their involvement will require some degree of partnership with multilateral donors, making ‘true’ investments a reality. The support is by no means trivial or simple. It will require ‘thinking-out-of-the-box’ approach involving both conventional and unconventional problem solving tactics. The likes of MIGA providing political insurance may simply not be enough to attract the right level of investment. While external risks continue to remain a major deterrent, there are other risk factors, often overlooked and internal to organizations, multilateral donor agencies including, that pose threats to how investment decisions are taken. Unlike external risks which play a large role with private sector involvement, internal risk factors play a more pivotal role on how investments decisions are taken within organizations. Less likely considered by many or recognized if at all, their impact tend to play a defeating role in strategic outcomes. Related to this will be how partnerships are perceived and administered with private investors towards meeting global poverty reduction programs. Internal and external risk working collectively are termed strategic risks. Risks considered significant enough to undermine an organizations main objective and in some cases, they been known to contribute to an organizations demise. A postgraduate research is currently looking on how these strategic risk elements, comprising both external and internal risk factors, could have any effect on organizations like the World Bank in meeting their primary objective as an entity towards reducing poverty and promoting economic development in emerging countries. Rightly suggested, the path to effective and meaningful economic development is to see a rise in infrastructure development. The most logical way, considering the significant investment involved, is to engage the private sector. Encouraging participation by promoting favourable business climate in host countries is just the beginning. Support from multilateral donors through effective and strategic partnerships will further aid the process, fostering the right level of investment on the continent. On this note, I encourage World Bank, EU and similar multilateral donor agency staff including their contractors with vested interest in Africa’s development to take part in an online survey towards establishing sources of strategic risks affecting multilateral donor agencies.