Akinwumi Adesina, the African Development Bank President has called on Korean investors to seize untapped investment opportunities in Africa, especially in the energy and agriculture sectors.
Adesina, while, speaking at a business forum attended by CEOs of Korean corporations, heads of financial institutions as well as ministers and business leaders from Africa, said “Africa is a continent that cannot be ignored by investors”.
Adesina highlighted the potential for Africa to become a leading market frontier, boasting enormous potential in agriculture and renewable energy sources. He thus, assured the Korean investors that, “Africa is not as risky as you hear. It is a continent of opportunities, waiting to be tapped.”
Adesina cited Moody’s analysis of global infrastructure default rates which shows that the continent ranks better at 5.5%, compared with 8.5% in Asia and 13% in Latin America. Meanwhile, the African Development Bank uses partial risk and credit guarantees to reduce the risks faced by the private sector.
Adesina observed that bilateral trade between Korea and Africa is important and growing, but said its volume needs to be improved. He said Korea’s trade with Africa in terms of exports and imports stands at only 2% of its total trade with the world. This, he said, must change given the huge economic opportunities and investment potential in Africa.
“The size of consumer expenditures is estimated to be $2.5 trillion by 2030. The African Continental Free Trade Area (AfCFTA), which is the largest in the world in terms of numbers of countries, is estimated at $3.5 trillion market size. With a population of 1.3 billion, of which 600 m are young people, rapid urbanisation and rising incomes of the middle class, Africa is the leading emerging market frontier.”
Akinwumi Adesina
Adesina listed several sectors that he said offered huge opportunities, including energy and agriculture, which is expected to grow to $1 trillion by 2030. This includes the development of special agro-industrial processing zones in which the bank and partners have invested more than $1.5 billion in 11 countries.
In the energy sector, Adesina said Africa has enormous renewable energy potential, including 11 TW of solar, which is the highest in the world, but only one percent is utilised. With 350 GW of hydro, only 7% is utilised; 115 GW of wind potential of which only 2% is used; and 15 GW of geothermal power of which only 2% is utilised.
African Countries Experiencing Higher Growth Rates
Speaking at the forum, Korea’s 1st Vice President, Minister of Economy and Finance, Byoung Hwan Kim, acknowledged that despite global shocks, African countries were experiencing higher growth rates.
Kim shared his strong conviction that there are enormous opportunities for investment in Africa compared to other continents and highlighted the important role of the private sector in harnessing these opportunities. Kim recalled that Korea was one of the poorest countries in the world but was able to overcome this largely by focusing on its small businesses and the private sector.
“We hope to share those experiences with our African counterparts,” he said, adding, “We support the private sector to boost investment and provide guarantees tailored to private sector needs.” Kim added that the Korean government would work with the African Development Bank to identify opportunities and use the KOAFEC Trust Fund to enhance the capacity of the private sector.
The meeting identified the African Continental Free Trade Area as a platform for mutual trade and investment.
The Chairman and President of the Export-Import Bank of Korea, Hee-sung Yoon, said Africa’s population and vast resources offers enormous opportunities for growth. “The AfCFTA will connect Africa with the rest of the world,” Yoon said. “It will be an opportunity for Korea to build strategic partnerships,” he added.
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