Mobilising private investment and building financial institutions is central to accelerating economic development in Africa, necessary to generate employment for men and women, and to burgeon progress towards the Millennium Development Goals (MDGs). More recent economic stability has improved Africa's business climate, with some encouraging trends. Inflation has remained below 5% since 2000, economic growth has exceeded 5% since 2004, and Foreign Direct Investment (FDI) in Africa in 2005 surpassed bilateral Official Development Assistance (ODA) for the first time. However, there are considerable challenges. Africa remains the region with the highest costs of doing business, and economic governance remains weak in many countries. Poor financial markets have discouraged private saving resulting in very low saving rates, while underdeveloped infrastructure has created production and trade bottlenecks, increasing costs.
2001 New Partnership for Africa's development (NEPAD) Declaration identified low capital accumulation as Africa's primary problem. This and subsequent AU summits have stressed the need to mobilize domestic and foreign investment, deepen financial markets and enhance cross-border harmonization. Additionally, the African Peer Review Mechanism (APRM), established in 2003 to harmonize political and economic governance standards across Africa, contains clauses regarding capital markets, public-private partnerships (PPPs) and corporate governance. In 2005, the Declaration on the Review of the Millennium Declaration and the Millennium Development Goals made at the 5th Ordinary Session of the AU Assembly in Sirte pledged a series of measures to promote private sector developmentwith particular benefits for the poor.
On the international stage, countries endorsing the 2002 Monterrey Consensus pledged to make more efficient use of domestic and foreign private investment, particularly through improved business regulations, together with increased private foreign investment in infrastructure and working through Public-Private Partnerships (PPPs). Three years later the World Summit Outcome emphasized the need for financial services, and leaders pledged to encourage greater direct investment and FDI.
The 2000 Cairo Plan of Action called for promotion of the private sector, including stimulating FDI, building financial markets and improvements to regulatory frameworks, inaddition to cooperation to address capital flight. This was supported by the Cotonou Agreement of the same year that pledged aseries of actions to promote investment and employment opportunities. These themes were reiterated later in the 2005 EU Consensus on Development.
In the Kananaskis Africa Action Plan, G8 leaders pledged to work with Africa to increase domestic and foreign investment, build capacity in infrastructural development and support processes of regional economic integration. These commitments were reiterated in the Gleneagles Communiqué, which pledged to improve the investment climate, maximize Africa's trading potential by supporting the continent's commercial capacities and mobilizing investment in infrastructure. In the following year the 2006 Heiligendamm Summit Declaration on Growth and Responsibility in Africa pledged to promote access to financial services, capital markets and support for the APRM support.