The time is ripe for the private sector, individuals, businesses and investment funds to take over investment in developing countries from the Dutch government. It is not just a matter of charity, says the Royal Tropical Institute.

The Royal Tropical Institute, a centre of expertise in Amsterdam for development issues is doing all it can to start up a debate on investment in Africa. The institute recently held a symposium entitled ‘Investment rather than donation’. It’s message was don't let other investors put you off with their horror stories about investing in Africa. Find out for yourself, because no-one should underestimate the huge opportunities in the African continent for he who perseveres.

Finance professor Ewald Engelen of the University of Amsterdam thinks the momentum still has to come:

"Out of all the thousands of billions that are invested in the world by pension funds and other investors, only a handful of change goes to Africa. A fraction of the total amount, a small percentage. And that is while Africa, as the International Monetary Fund agrees, will show much more favourable growth figures in the coming decades than the Western world. An annual 15 to 20 percent, compared to zero to three percent for Europe and North America."

Cold feet
Investors are not crazy and if there is a profit to be made somewhere… that is where they will all go. But not in Africa’s case, in spite of the fact that last year's stock markets in Ghana were third best in the world. So why do investors avoid Africa?

Cold feet, thinks Professor Van Engelen. They fear political instability, serious devaluation or inflation, corruption. And above all, they have fears about solvency, of not being able to sell their stakes on to other parties.

Ghana versus Malaysia
Africa has got rivals. Asia has fought its way up like a tiger, Latin America is attracting more and more foreign investment. Africa is lagging behind. Just compare Ghana to Malaysia. The two countries have a lot in common. They both gained independence in 1957 and had more or less the same starting position. But today, Malaysia’s economy is ten times as large as Ghana's. And Ghana is Africa's success story.

Sympathy
According to Nanno Kleiterp, Executive chairperson of the Dutch development bank (FMO), aid organisations – in their search for donations – have portrayed a completely inaccurate image of Africa.

“NGOs and aid organisations peddle in sympathy. Sympathy for Africa. That's what brings in the money. We don't hear the success stories. The other side, where there is entrepreneurship, where there is growth and innovation, where the money is made, remains underexposed.”

Advice
That does not mean that investors do not need to be tough in these relatively young democracies. Pioneer among Africa investors, Marise Blom, of the Dutch company Mango Capital gives the following advice:

“Africa was a real hype in 2007. Our fund booked profits of almost 60 percent. That money disappeared when the credit crisis broke out, while Africa came through relatively unscathed. Investors withdrew their funds in panic. We learnt not to be overconfident and to take it easy. That is what I tell investors: only invest money that you don’t need for at least the next three to five years. There may be obstacles. But the profits are great.”

Lazy
Africa has become more stable and has great economic potential, says Ms Blom. It is just a question of time before the large investors, the pension funds, gather courage to take the plunge.

What do Africans themselves think? They are keen to get to start business with Western investments, says Tanzanian investor Ezra Musoke:

“Investment is better than donation for Africa. Whether it comes via the stock exchange, or directly to businesses and individuals through microcredit.”

Donations make you lazy, he says.