In recent times African governments with assistance from donor agencies and international financial institutions have under taken institutional reforms as a vehicle to attract long term investments from local and foreign sources. The result so far has not been encouraging. At best, these refrorms have attracted short term investments. Why has the private sector not respond ed to these institutional reforms as expected?
2006-09-10 11:24:43 · 11 answers · asked by Kofi 1 in Social Science ➔ Economics
Extremely simple. Look at the history of african "civilizations", and you can see the lack of stability in political, economic, and social patterns for generations, so why would any responsible, long term financial institution, or business want to invest in such a sloppy, pathetic environment. Not me!! God Bless you.
2006-09-10 11:32:23 · answer #1 · answered by ? 7 · 1⤊ 0⤋
They look promising but as a fact they are deceiving since some of these countries are under very strict dictatorship like Zimbabwe and some others like Sudan are also prone to such things and are not safe to conduct a business or make an investment. Africa is a very promising continent maybe the most promising in the coming 50 years so it is not just the institutional reforms that will ake it viable for investment but the freedom culture education and technology that will put them on a safe platform to act from.
2006-09-12 23:04:33 · answer #2 · answered by Anonymous · 0⤊ 0⤋
There's more to it than institutional reforms.
For one, there is still a significant instability risk premium. That's a complicated way of saying, sure we'll invest in a Nigerian company, but since foreign workers are routinely abducted, and there's ongoing sectarian strife, we're not sure our investment won't just get seized or destroyed, so we demand a higher return.
For another, there are investments that compensate better based on risk, exposure and return. 33% is enticing, but 12% with only default risk is probably better from the conservative standpoint of most of the wealth-holders.
It's not that the private sector hasn't responded, it's that expectations were too high.
2006-09-11 03:55:46 · answer #3 · answered by Veritatum17 6 · 0⤊ 0⤋
There isn't one simply reason. Currently, nations are mostly forgiven loans they cannot repay. In other words, if you piss money away that was spent horribly (and even spent on corruption).....the governments are rewarded with more aid.
There is currently no incentive for the governments of African nations to make real reforms, because they'll receive aid either way.
The private sector doesn't respond to the "reforms" because they know they'll never see their money again.
2006-09-10 16:38:25 · answer #4 · answered by intelbarn 3 · 1⤊ 0⤋
No I believe that Africa is still way to unstable to invest into long term. It may be more wise to invest in South American countries. As soon as Cuba goes free jump on that right away!
2006-09-15 07:09:35 · answer #5 · answered by Chris T 2 · 0⤊ 0⤋
good economics/commerce question. it takes a long time to build confidence of investors. it is not agreement that is needed...but stable governments and honest governments -- when instability reigns no private or public investor will approach. the problem is complex and very long -- you can write PhD dissertations, books, articles...but you can not bring investments to an unstable regime -- plus the fact that mortality rates are very high...and a host of other factors going against investment risks. private sector like stability and a very high return.
2006-09-10 15:52:25 · answer #6 · answered by s t 6 · 1⤊ 0⤋
i've got tried to think of of a stable answer, yet rather, various the people i comprehend are basically people i've got met from the neighbourhood and church and paintings. On a social point various the people I interface with, i've got hassle-free over some years. So i assume have faith performs an important function. additionally friendliness and kindness. i assume it takes various time to make a real buddy. and a few attempt too. I Cr 13;8a
2016-11-07 01:37:36 · answer #7 · answered by Anonymous · 0⤊ 0⤋
As long as Africa continues to have dictatorial governments and corrupt public services (where public services even exist) there will be no long term investment to speak of.
2006-09-10 11:57:20 · answer #8 · answered by stevewbcanada 6 · 1⤊ 0⤋
I doubt it, who in their right mind would invest in a place that's population is most likely to die from a revolution or from AIDS on
the other hand you might get to me Angelina Jolie or President Clinton.
2006-09-17 22:25:44 · answer #9 · answered by nbr660 6 · 0⤊ 0⤋
first what reforms ? whose institutions?
what countrys in africa are you refering to? and recent times seems far fetched.
2006-09-10 12:35:26 · answer #10 · answered by Anonymous · 1⤊ 0⤋