Africa risk missing SDGs deadline over low investments, survey finds

Emerging economies in Africa are likely to miss the deadline for the 17 Sustainable Development Goals (SDGs) which is less than a decade away, on account of low investments compared to other markets.

A study by Standard Charted reveals that only 3% of assets under management valued at $50 trillion is invested in emerging economies of Africa.

This compared to 64% of assets under management which are invested in Europe, 22% in Asia, 5% in south America and 2% in middle east.

The survey which was conducted between July and August 2020 focused on a panel of top 300 investment firms with total assets under management of more than $50 trillion.

According to StanChart, the risk posed by emerging markets was flagged as a major barrier to investment.

More than two-thirds of investors believe emerging markets are high-risk, compared to 42 per cent who believe the same for developed markets.

More than half of the panel or 53% believe returns from investment in Africa are low or extremely low, with almost three in five investors or 59% saying that they are deterred from investing because they lack in-house specialist teams.

However, 93% of asset managers who already have investments in Africa indicated their plans to increase investments in the continent in the future.

54% of Africa investors said their investments had performed as well as – or better than – their developed market investments over the past three years. The figure for emerging markets overall was 88 per cent.

The survey further indicates that COVID-19 may have made it even harder for emerging markets to get the investment they need.

“A significant surge in private-sector investment – alongside public investment and commitments – will be required to bridge the gap and hit the SDGs target over the next ten years. Right now, COVID-19 has made the imperative to act even stronger in the region,” said Sunil Kaushal, Regional CEO, Africa & Middle East, Standard Chartered.

Some 70 per cent of investors believe the pandemic has widened the capital gap further.

The United Nations Conference on Trade and Development estimates that Africa faces a $1.3 trillion funding gap for projects under SDGs.

  

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