Sub-Saharan Africa’s march towards having more people of working age than China in the coming decades demands an urgent expansion of investment to avoid leaving the region behind, the world’s biggest hedge fund Bridgewater Associates has warned.
A new report by the hedge fund, seen exclusively by Semafor Africa, estimates that sub-Saharan Africa requires a doubling of current investment to at least 30% of gross domestic product “to achieve a much steeper development trajectory.”
But the path to this increase requires concerted efforts to dispel global investor perceptions of high risk in the region by strengthening weak institutions and human capital, and breaking down policy fragmentation from one country to another that shrinks the market opportunity.
Bridgewater forecasts Africa’s long-term future economic growth at a maximum of 5.5%, based on a “positive but low” long-term output-per-worker growth of 2%, and working-age population growth of about 3%.
The estimates “suggest that, unless there is significant and persistent additional action, the region will not achieve the growth levels needed to meaningfully address the current imbalances,” the report said.
The report recommends ramping up investments by development banks, particularly the World Bank’s International Development Association (IDA), to address challenges in poor countries.
