4.2 Maintaining macro stability to attract and sustain private investment
As public investment is necessary for provision of public goods, it needs to scale up initially to address Africa’s pervasive market failures, and then to crowd in larger private investment from private agents. To secure strong private investment, macroeconomic stability is essential, as high uncertainty and risks deter private agents from making forward-looking productive investment. At the same time, harsh fiscal retrenchment and overly restrictive monetary policy aimed at attaining the stabilization objective only cannot take the transformation agenda forward.