press conference to launch socially responsible investment index for africa

The New Partnership for Africa’s Development (NEPAD) and Africa Investor (Ai) launched a preliminary pan-African investment index today with the aim of attracting socially responsible capital from private investors worldwide to spur socio-economic development on the continent and help achieve the Millennium Development Goals.

At a Headquarters press conference, Cheick Sidi Diarra, Under-Secretary-General and Special Adviser on Africa, said the Ai30 Socially Responsible Investment (SRI) index -- a benchmark based on global best practices for promoting good corporate governance, environmental preservation and social development and adapted to Africa’s operating environment -- would be a vital tool for closing the region’s funding shortfall.

Investing a mere 1 per cent -- or $30 billion -- of the world’s almost $3 trillion sovereign wealth funds in Africa would go a long way in sustaining strong economic growth, he said.  “That’s very important.  It’s a source of mobilizing resources in order to meet the resource gaps of the continent.  That is the aim of our discussions today,” he added, noting that Africa’s gross domestic product had expanded by an average 5 per cent annually in the last five years, according to the World Bank.

Echoing those sentiments, Bamanga Tukur, Chairman of the NEPAD Business Group and of Africa Investor, a provider of strategic research, indices, communications and investment, said that ending extreme poverty in Africa -- where millions lived on less than $1 a day -- required socially responsible equity investment rather than loans, which merely saddled the continent with heavy debt.  Ai Vice-Chairman Hubert Danso added that, in structuring the SRI index, Ai had taken into account the United Nations Principles for Responsible Investment, NEPAD’s Peer Review Mechanism, investors’ concerns and the input of an expert review group comprising the Organisation for Economic Cooperation and Development (OECD), the Johannesburg Stock Exchange (JSE), Investec, the International Finance Corporation (IFC) and Fraters Asset Management.

From 2005 to 2007, SRI investment had grown 17 per cent, while traditionally investment expanded just 3 per cent, Mr. Danso said.  By 2011, the inflow of socially responsible assets under management would reach $11 trillion.  Ai30 would be the only pan-African SRI initiative capable of meeting the stringent investment criteria of global SRI funds.

Earlier today, the United Nations participated in an SRI conference with Ai, private-sector investors and hedge fund managers, among other members of the financial sector, in advance of the General Assembly’s 22 September High-level Meeting on Africa’s Development Needs.

“We expect that by the end of today some new commitments by the private sector will be made which will feed into the (high-level) process next week,” said Amir Dossal, Executive Director of the United Nations Office for Partnerships, noting that participants had discussed the idea of referring to sovereign wealth funds as sovereign wealth development funds to stress a socially responsible focus.

Responding to a question about the potential impact of the current Wall Street crisis on investment in Africa, Mr. Dossal said the net loss of billions of dollars on global markets would indeed exacerbate the $80 billion shortfall in official development assistance intended to help the least developed countries meet the Millennium targets.  However, as the sovereign wealth funds were interested in investment rather than aid, the pace of investment in those funds should continue.  Africa’s high gross domestic product growth rate was increasingly attracting private investors.  New stock exchanges were opening and basic investment and savings options being created, rather than sophisticated instruments such as mortgage-backed securities.

Concerning commitments by sovereign wealth funds to invest in Africa, Mr. Danso said that, rather than securing specific commitments from investors, the SRI discussions in the last two days had succeeded mainly in identifying a comfortable and familiar structure for the international investment community to build the SRI index.

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For information media • not an official record