Africa got a record $88 billion of foreign direct investment (FDI) in 2008, but it was a tiny share of total global (FDI) which was down to $1.7 trillion, according to the World Investment Report 2009, published by United Nations Conference on Trade and Development (www.unctad.org). According to a report in Tanzania’s The Citizen newspaper, poor infrastructure harms Africa’s competitiveness as an investment destination.
It says the World Association of Investment Promotion Agencies (www.waipa.org) is calling on Africa to find a lasting solution to the problem. The report cites Waipa Vice-President Emmanuel ole Naiko as telling a First Africa Regional Investment Conference in Cameroon that poorly interconnected air routes within the continent and barriers to cross-border trade were discouraging investors. Mr ole Naiko is also Tanzania Investment Centre executive director.
He reportedly said roads, railways and ports target Europe and USA and are poorly connected: “Developing countries must break down the barriers at their own borders.”
He urged African economic groupings to stimulate business. “We must remove the notion that exporting is only when you sell commodities to the US and Europe and not when you sell them to African countries,” he said.
The report forecasts that last year’s global financial crisis will cut global FDI to $1.2 trillion this year but it will start picking up next year. “Inflows as a share of Africa’s gross fixed capital formation grew to 29% in 2008, from 27% in 2007. In contrast, divestments by some African firms abroad reduced FDI outflows from the region. A number of policy measures adopted by several African countries continued to make the business environment more conducive to FDI – both inward and outward. However, the sharp decline in commodity prices and the slowdown in global economic growth in the second half of 2008 may signal a possible reversal of the trend towards rising FDI in 2009, breaking the region’s six years of consecutive growth in inflows as TNCs cancel or postpone new projects.”