Ray W Washburne, President and CEO, Overseas Private Investment Corporation: Interview

Ray W Washburne, President and CEO, Overseas Private Investment Corporation (OPIC)

Interview: Ray W Washburne

How can sub-Saharan Africa attract more foreign direct investment (FDI) across all sectors?

RAY W WASHBURNE: FDI inflows into Africa are increasing sharply and are playing an important role in fostering economic growth and development in a number of sectors across the continent. While it once accounted for a small share of available capital for projects, there has been a dramatic reversal in recent decades. Both FDI and aid flows to Africa have increased in recent decades, and the continued adoption of reforms and business-friendly policies are key to maintaining these investment flows, which have increased at a much faster pace in recent years. Sub-Saharan Africa, as is the case with other emerging regions, shows strong potential thanks to its solid economic growth, greater connectivity and improved position in global commodity markets. The improving business climate is also crucial as reforms are widely implemented and innovation is spreading through all sectors of society.

How effective are the regulatory frameworks for private-public partnerships (PPPs) across Africa?

WASHBURNE: PPPs are increasingly being recognised as an effective tool not just to finance major infrastructure projects, but also to reduce poverty by supporting grassroots efforts that expand food production and access to education, health care, clean energy and financial services. We have seen a significant improvement in the ranking of a number of African countries in the World Bank’s annual ease of doing business index, in particular the criterion that measures regulatory frameworks. Overall, the number of countries in sub-Saharan Africa that are engaged in business regulatory reforms has doubled over the past decade, according to the most recent report. While Africa as a whole remains a more challenging place to do business compared with more developed economies, this gap is narrowing rapidly.

What is needed to support infrastructure development in Africa over the coming years?

WASHBURNE: Infrastructure development requires significant investment in terms of time and financial resources. One of the major needs in Africa is increasing electricity access, and the construction of additional power plants is crucial to achieve this goal. However, these facilities often take years to be fully completed, and the costs often exceed the public sector’s financial resources. It is also crucial for government institutions to encourage and facilitate the involvement of the private sector in these projects, as they can be a powerful tool for job creation and sustainable economic growth in all markets. Overall, it is the development of a comprehensive financial framework that will lead to the filling in of infrastructure gaps in sub-Saharan Africa, especially those that are critical to supporting key sectors such as health care, agriculture and energy.

In what ways can more inclusive growth be encouraged on the continent?

WASHBURNE: Firstly, we need to invest in projects in rural communities as they are the most isolated in terms of access to investment tools such as financial services that would allow them to grow their own businesses and also increase agricultural production. At the same time, women should be supported as they play a fundamental role in the economic development of these communities. In addition, better connectivity, such as roads, telecommunications and transport, can lead to inclusive growth by creating jobs, spurring economic activity, and broadening access to markets and key public and private institutions. Today, digital connectivity such as mobile payments and health and education delivery systems are driving inclusive growth by breaking down many of the rigid physical boundaries and barriers that traditionally hindered both inclusive development and sustainable growth.

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Ray W Washburne

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The Report: Kenya 2018

Economy chapter from The Report: Kenya 2018

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