CrossBoundary Advisory
12.07.2020
Publication
12.07.2020
Publication

Connecting Investment and Economic Development Best Practice

Key Insights
Governments, development partners and development investors should adopt a more targeted analytical framework to identify which sectors to prioritize for development.
Development finance institutions and development investors should proactively prioritize investment in firms within these sectors, even if returns may be lower than in other areas.
Support for both private-sector and public-sector investment facilitation should be substantially increased, especially in light of COVID-19, as a key feature of economic recovery.
COVID-19 is causing countries in Africa and other parts of the developing world to face multiple overlapping crises: the pandemic itself, a wider health crisis, a food security crisis and an economic crisis that is further exacerbated by low commodity prices and a decline in global travel and trade as well as financial flows.

Support for both private-sector and public-sector investment facilitation should be substantially increased, especially in light of COVID-19, as a key feature of economic recovery plans.

As Africa grapples with this new reality and what it means for its economic outlook in the short, medium and long terms, many governments are already planning for economic recovery. In doing so, they seek not only to revive economic growth to be able to handle these overlapping crises but also to deliver economic transformation that can increase the resilience of economies to future economic shocks and of health and social welfare systems to future pandemics and natural catastrophes. And with Africa’s population forecast to rise from 1.3 billion today to 4 billion by 2100, pressure is fast rising to accelerate the economic development of the continent in such a way that it creates sufficient jobs and economic opportunity for the rapidly increasing youth population.

Robust economic recovery plans need to focus on scaling up private investment that can create jobs, sustain livelihoods, widen the tax base to pay for social welfare, increase net exports and strengthen markets for the informal sector. Such investment needs to be facilitated and directed to the areas of greatest impact, for both short-term recovery and long-term transformation.