Private capital to Africa seen at $55 bln in 2010

By Helen Nyambura-Mwaura

NAIROBI (Reuters) - Private capital flows into Africa are estimated at $55 billion this year from $49 billion in 2007 owing to improved macroeconomic policies across the continent, an Africa Economist for the World Bank said on Thursday.

African economies fared much better than expected during the global recession because many of their governments maintained prudent macroeconomic principles and kept up public investments.

"We are seeing private capital flow back into Africa after the recession," Shanta Devarajan, the World Bank's chief economist for Africa, told Reuters in an interview.

"The fact that African policymakers responded with prudent policies during the crisis means that the policy environment in Africa has never been better, the productivity of external resources in Africa has never been higher."

In some cases, the local currencies will appreciate as a result of the inflows, but that could be managed so the real exchange rate does not strengthen too much, he said.

In addition to the private capital, Africa will also be receiving debt relief and aid, and remittances.

Funds sent home to the region by citizens living abroad are forecast to grow by almost two percent in 2010 from the $21 billion previously, according to the Bank.

Inflation in the mid-2000s was half what it was in the beginning of the 1990s, Devarajan said. In 1993, there were 23 countries with inflation higher than 20 percent but this had dropped to just two by 2007.