Just When Africa’s Luck Was Changing

TWO years ago, when Dubai World said it would invest $230 million in Rwandan tourism, officials here rejoiced.

Among the many projects the company trumpeted were a sprawling luxury hotel on the 18-hole golf course here and an ecolodge in the Akagera National Park, a swampy grassland further northeast where herds of elephants and water buffalo roam.

In an interview at his offices in Kigali last fall, Rwanda’s president, Paul Kagame, cited the Dubai investment as one of many that his small east African country had managed to attract in its effort to reduce its dependence on aid in favor of private investments.

But just last month, Dubai World ratcheted back its ambitious investment plans, its coffers strained by the global financial crisis. The company says it will go forward with only two of the eight projects it had planned in Rwanda, and the Kigali hotel and Akagera ecolodge didn’t make the cut.
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Continentwide figures for foreign direct investment so far this year are not available. But in the sub-Saharan African countries, the International Monetary Fund estimates, foreign direct investment will drop roughly 18 percent in 2009 from about $30 billion in 2008.

“The decline in investment will reduce the ability of African governments to fund health, education, infrastructure and nutrition programs,” said Léonce Ndikumana, director of the development research department at the African Development Bank.

Organizations like the development bank have stepped up their efforts to limit the impact of the credit crisis. But many fear that the moves will not be enough. The World Bank said recently that international financial institutions by themselves could not currently cover the shortfall in capital and investments to emerging-market countries.

According to the Organization for Economic Cooperation and Development, the amount of private investment going to Africa had begun to outpace aid. M. Nathaniel Barnes, Liberia’s ambassador to the United States and the country’s former finance minister, says that while foreign aid is still crucial for African countries, it usually focuses on humanitarian issues like emergency food and shelter or medical supplies. In contrast, he said, foreign investment provides long-term sustainability and growth.

“Instead of talking to Usaid, I’d rather be talking to a company like Nike,” Mr. Barnes said. “Having a partner like that means jobs and economic growth, and you just don’t get that from aid.”