Private sector participation is the key to Africa's future economic development, but the continent must address a range of investment risks to attract the finance needed to achieve it, the World Economic Forum (WEF) on Africa has heard.

Delegates attending the 25th economic summit in Cape Town last week, themed Then and Now: Reimagining Africa's Future, were told the continent has been transformed economically since 2005, growing 2-3 per cent faster than the global average.

It is hoped this progress will be sustained in the years ahead through rising foreign direct investment, particularly in the natural resources sector; increased public investment in infrastructure; and higher agricultural production.

Africa will never go back, South African President Jacob Zuma told business leaders, academics and politicians on Friday, the last day of the summit, before insisting that "this is the moment to invest in the continent".

“I am convinced that, much as it looks difficult because of the size of the finances that are needed, the opportunities are big,” he said.

The biggest of the challenges facing Africa was infrastructure development, according to the International Finance Corporation (IFC), a member of the World Bank Group.

Former UK prime minister Gordon Brown, who chaired the summit's global infrastructure initiative, said he believed Africa's growth could be 2 per cent higher if it overcame the obstacles in this area.

“Africa has got great mineral reserves, it’s got great uncultivated farmland, a population of young people ready to work, and we’ve got to find a way of making sure Africa’s growth can be speeded up by delivering the infrastructure that’s necessary,” he said.

Power generation

World Bank research shows the continent needs 7,000 megawatts of new power generation capacity each year but only 1,000 megawatts per year is being installed. About 93 per cent of hydro power potential in Africa remains unexploited.

The region’s transport prices, a key driver of competitiveness, are the highest in the world, and only 58 per cent of Africans have access to a clean water resource.

IFC vice president for global client services Jean Philippe Prosper told a developers’ summit on the sidelines of the WEF that such statistics represented a huge opportunity for those in infrastructure development.

But global financiers face a scarcity of projects capable of being funded because of a range of issues. Only about half of the more than $90 billion in regional infrastructure needs are being financed, the summit heard last Tuesday.

Infrastructure project development takes time and risk, noted Prosper, and investors will only commit this effort if the conditions are right.

“We want to encourage policymakers to build more capacity to improve regulation and institutions, and public-private partnerships that balance interests through appropriate risk sharing mechanisms,” he said.

Other issues undermining Africa’s economic development include high levels of corruption, a lack of transparency when it comes to complex deals and projects, as well as high unemployment rates.

Mr Zuma maintained taxpayers did not deserve to have their money used for corrupt purposes and that, in the case of South Africa, strong institutions had been set up to tackle this challenge.

Fighting corruption

“We have a very strong anti-corruption culture that we have developed, that was never there before. People in South Africa talk more about this and the government established a lot of institutions that are fighting corruption,” he said.

Ghana vice-president Kwesi Amissah-Arthur stressed the need for education and skills development if young people were to secure meaningful work.

In addition, a number of high profile delegates warned that, due to Africa’s strong growth and the world economy’s ongoing difficulties in recent years, the continent could no longer expect easy money to flow in from developed nations.

Paul Polman, chief executive of Unilever UK, told delegates that in his view there were "no free rides" anymore.

“It is increasingly not any more about money just easily coming to Africa from overseas. Therefore, we will have to see local private sectors coming to the fore and it can only be done by means of education,” said Polman.

“You cannot just dig holes in Africa anymore and ship things out and then reimport [them] at a high price again after value has been added,” he added.

Investment in Africa had stalled over the past few years due to the global economic down turn, which had sent investor finance to safer markets.

However, according to Bob Diamond, chief executive of Atlas Merchant Capital, February's elections in Nigeria, Africa's biggest economy, were key to reigniting investor confidence in the continent.

Nigeria’s election has hailed as a democratic milestone as it was the first time an incumbent president lost re-election since the country’s independence from military rule in 1998.