Private investment and aid in Africa

One of the things that the Murph bangs on about (and his acolyte, Arnald omments upon here) is the way in which capital outflows from poor countries are much higher than the aid flows into poor countries.

It\’s occured to me that this isn\’t quite telling the whole story.

Outflows are of course private sector (even if the outflow is of what the governors have looted, it\’s still a rpivate outflow) and the aid inflows are of course official.

So we\’ve another number that we need to find: what have been private sector inflows into the same countries over the same period?

One little data point:

a review of the $4.2 billion in World Bank support to the ICT section during fiscal 2003–10. During that time, the Bank Group was the largest multilateral financier in telecommunications in Africa. (Yet that was about 1 percent of private investment in telecommunications of $400 billion between 2003 and 2009.)

If private sector outflows are 10 times official aid going in but private sector inflows are 100 times official aid going in doesn\’t that mean that private sector in is 10 times greater than private sector out?

No, no, of course not, we can\’t extrapolate that far from just one number like this.

But it is true that we need to look at what private sector inflows are: theory says capital should be going to where it\’s most valuable which is those places where it\’s scarce, ie poor countries.

So, does anyone know what the number is?

Looking perhaps at the same countries that Christian Aid uses to compile it\’s ten times as much as aid is looted, what is the number for private sector capital going in?

2 thoughts on “Private investment and aid in Africa”

  1. Maybe looking at the levels of investment China is making in the area might help. China is not giving aid, it is investing and offshoring just like we did when China and India were cheap – but Ritchie would say it is “taking advantage” of the Africans.

  2. I think ‘can’t extrapolate’ is putting it mildlly – of course the World Bank is not going to be a huge % of global telecoms spending, but surely it will be much higher than 1% in Africa?

Leave a Reply

Your email address will not be published. Required fields are marked *