Sustainable Development is a dream that African nations have spent years and resources trying to achieve. The task of achieving sustainable economic growth, over the years, has been hindered by a list of elements, the most evasive being; finance. The financial constraints on several ambitious economic projects and infrastructural development have sloth-paced the development of the continent.
The potential of the continent to attain economic independence has been long overdue. Africa has 60% of the world’s uncultivated arable land, 40% of the world’s solar energy, 71% of global cobalt production, and 77% of platinum; to mention a few. The continent is blessed and it’s a wonder; with so much potential, it still lags in achieving economically sustainable development.
The continent currently has one of the youngest populations in the world. The World Economic Forum revealed that by 2030, Africa will constitute more than 40% of the world’s youth. As a result of globalization, this young population has access to knowledge and innovation. We have seen tremendous achievements by this generation across sectors in the pursuit of economic growth.
These achievements have been greatly limited by several factors which have their roots in the unavailability of finance. Finance is a crucial aspect in the administration of a government as well as the administration of a business. This has affected African nations dangerously and has caused these nations to lack infrastructure; transportation networks, energy facilities, ICT, and health infrastructure impede intra-African trade and connectivity.
Access to finance has affected the growth of businesses in Africa especially Small and Medium Enterprises (SMEs) within the continent due to high interest rates, and collateral requirements required from financial institutions. Government policies and legal structures have not helped in this regard. Fluctuations and inconsistent financial policies have been a deterrent to the growth of development of foreign and domestic businesses within the continent.
The fluctuations of the exchange rates and the volatility of local currencies have been a major setback for the availability of funds for emerging economies. The inconsistency of the exchange rate increases the risk of cross-border transactions and is one of the many fuels of inflation that can greatly affect the cost of doing business within the continent, thereby becoming a huge deterrent to potential investors and financial lenders.
There is no denying that the financial challenges being faced by the continent are limiting the economic potential of the continent but we cannot ignore the giant strides that have been made to cut the effects and foster sustainable development.
According to Dr Akinwumi Adesina, president of the African Development Bank Group, AfDB has been providing support to an estimated 400 million people in the past 7 years. With over $44 billion in support of infrastructure within the said year. This makes the bank the largest multilateral financier of infrastructure in Africa. The bank is providing long-term loans and risk guarantees to support infrastructure projects within the continent.
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The European Union has, in its own way, been a huge support to African nations in the provision of financial support for infrastructure projects. The EU Intra-Africa Academic Mobility Scheme is a programme developed to encourage international learning mobility across the continent. Through the programme, support for consortia of African Higher Education Institutions and scholarship opportunities for African trainees, students and staff are provided.
A lot still needs to be done within the continent to improve access to finance for economic activities. Collaborations between the public and private sectors present huge potential that can mitigate the risks of running businesses in the continent and also mobilize private capital for large-scale projects. Organisations are driving policies that harmonize and regulate the financial sector.
