Finance officials from 44 sub-Saharan African countries joined their U.S. counterparts for a State Department conference Tuesday aimed a promoting private investment in Africa through the broader use of national credit ratings. Only a handful of countries in the region have had their credit-worthiness graded by private rating agencies.
The Bush administration contends that private investment and not foreign aid offers the best hope for growth and development in sub-Saharan Africa. And it sponsored the conference as part of an effort to prod governments in the region to open their financial books to private ratings agencies in order to make their economies more transparent and attractive to investors.
The meeting, held a day after the World Bank and International Monetary Fund spring meetings in Washington, included finance ministers and central bank directors from 44 African countries and key administration officials including Secretary of State Colin Powell and Treasury Secretary Paul O'Neill.
In a keynote address to the meeting, Mr. Powell said private-sector money accounts for more than 80 percent of the estimated three-hundred billion dollars in long-term capital that flows each year to developing countries.
He said countries that have sound economic policies will attract more aid and investment, and he said countries that have sovereign, or national, credit ratings will have an "important edge" in the competition for funds:
"Countries have to compete with each other for investment against other countries in the same region and against the rest of the world," he said. "Money, capital, is a coward. It will go nowhere where it is put in fear. Money will fly and go away from corruption and bad policies. It does not want to be around conflicts. It does not want to be around political unpredictability or instability. It goes where it is welcome and where investors can be confident of a return on the resources they have put at risk."
Mr. Powell said sovereign credit ratings "give courage to capital" and can be a country's ticket to the benefits of the global economy.
Only four sub-Saharan African states, Botswana, Mauritius, Senegal and South Africa, currently have sovereign credit ratings and officials of those countries had featured roles in conference panel discussions on the process of acquiring them.
The Bush administration says it will underwrite the initial costs of rating as many as ten sub-Saharan countries in a process expected to be completed within a year.
Fitch Ratings Limited, one of the three private companies, along with Moody's and Standard and Poor's, that does national ratings, has won the contract for the project and co-sponsored the conference here.