Jersey Finance, which promotes the jurisdiction, has pointed to a new report by Capital Economics that suggests an opportunity for international financial centres to benefit from the foreign direct investment required to facilitate improving growth rates in Africa.
The research suggests that for Africa as a whole to quadruple living standards by 2014 will require total investment of some $85trn, or about the same level of investment as the total global GDP currently.
However, the sources of investment from Africa itself are lacking, meaning that some $6.1trn in foreign direct investment will be required, as part of plugging an overall shortfall of $11.4trn, if the continent is to meet the level of growth suggested. The remainder of the gap would be covered by a combination of aid, domestic profits and local government action.
Jurisdictions such as Jersey will benefit because they offer levels of investor protection and access to investment expertise, which will be required to manage the investments into Africa, according to the research, which was commissioned by Jersey Finance.
The attraction of investing in Africa comes largely from what Capital Economics identifies as its “demographic dividend” by virtue of its population that continues to grow yet remains younger, with the working age population expected to double to some 1.2 billion over the next 30 years.
Geoff Cook, CEO of Jersey Finance (pictured), said: “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.”