Africa should beware of some unscrupulous investors who come to the continent just to exploit its resources and make money without contributing to development.

Patrick Chinamasa, the Zimbabwean finance minister, said most foreign investors are flocking the continent to make money and not to develop the continent.

"The reality is that foreign investors come to Africa to make money and not to be part of the solution to Africa’s economic problems. It’s, therefore, upon African governments to innovate and come up with mechanisms that will drive the continent’s economic growth,” Chinamasa said during a discussion under the theme,"New business models for the private sector resource mobilisation.”

The discussion was at the ongoing 49th African Development Bank (AfDB) Annual Meetings in Kigali on Tuesday.

The new business models seek to pitch new ideas on private sector resource mobilisation and increasing investments in Africa. 

Chinamasa told the session that though governments were trying their best to put in place supportive policies to attract foreign investment and funding for the private sector, financial institutions were not following suit. 

"Banks and large financial institutions are not playing their proper roles to support the private sector. They must come up with instruments and models that support the informal sector, not only in financing, but also in skills building,” the Zimbabwean minister said. 

"It is paramount to know that before banks can fund the private sector, local investors should first be equipped with skills and knowledge on how to invest in their areas of choice. This way, they will make meaningful contribution to the continent’s development.”  

Old models

Zaki Khoury, the Microsoft Corporation chief in the Middle East and Africa, advised continental leaders to desist from trying to fix old models of financing, but instead create new ones.  

"We must understand that the growth of the private sector is not about money. African governments must refocus the way they facilitate SMEs because the old models have failed. Why try to fix an old system or repair aspects of the same system by raising more money? What we need are new models,” Khoury said. 

Experts also challenged global financial institutions to trust African markets more by opening up avenues through which SMEs can directly apply for funds. 

"For investors who still believe that Africa is a risky place to invest should know that the higher the risk, the more the benefits,” Jyrki Koskelo, the director of Africa Agriculture and Trade Investment, said. 

"Each company has its risk mitigation factors and, I am sure that everyone knows that Africa is a profitable place to invest.”

Charles Boamah, the AfDB vice-president (finance), said the Bank was committed to working more closely with the private sector to form strong partnerships that can enhance financing options to drive Africa’s transformation programme.