Ghana’s finance minister told GlobalMarkets that the country needed to look beyond loans in its relationship with China as the World Bank cut its growth forecast for Sub-Saharan Africa on Wednesday.
Finance ministers from the region said that, even in fast-growing economies, more private sector investment was crucial to ensure that the pace of expansion was sustainable.
The World Bank’s Africa Pulse analysis predicts that Sub-Saharan Africa will grow at 2.4% in 2017 — up from last year’s 1.3% but below the April forecast of 2.6%. This will not be enough to lift per capita income this year, however, the bank warned.
The G20 Compact With Africa initiative, founded in March, is designed to promote private investment in the continent, and Ghana was one of the first seven countries to express interest in the programme.
“If you have an economy with over 70% of debt to GDP ratio, it is not sensible to pile up more loans,” Ken Ofori-Atta, minister of finance in Ghana. “The intent behind the G20 platform of macro stability and fiscal discipline is to begin to attract more private capital. “This what we want to begin to discuss with China.”
Companies from the country could be potential investors in a broad range of sectors, said the minister. He mentioned ICT, real estate, agriculture and industry, as well as infrastructure.
“All of these are areas where we can have potential partnerships, which would help to activate our private sector as well as extend the reach of the Chinese private sector,” added Ofori-Atta.
“We want to say to China: who are the private sector players that we can engage with and who will look at us as an investment opportunity, rather than a fixed income investment.”
The IMF this week projected growth of nearly 9% in Ghana for 2018, but even there the government is aware of the need to do more.
Chinese investment in the form of private capital rather than loans would not affect the government’s efforts to cut its interest payments, and would also help the private sector provide the jobs the country needs.
Côte d’Ivoire finance minister Adama Koné echoed the importance of shifting growth to the private sector, telling GlobalMarkets that he wanted to make the private sector the “engine for growth” of the economy.
Although there have been some improvements in external conditions, such as rising energy and metal prices and increasing inflows, Punam Chuhan-Pole, World Bank lead economist and author of the Pulse report, said the outlook remains “challenging”, with economic growth well below the pre-crisis average.