Africa Foreign Investor Survey 2005 - unido

governments have an absolutely critical role to play. In a
recent study, Doing Business 2007, prepared by the World
Bank and the International Finance Corporation (IFC),
some of the key elements of institutional reform – ranging
from registering properties to enforcing contracts,
protecting investors and dealing with corruption, were
identified. Most of these are within the purview of governments
to upgrade - the record of SSA countries in this
respect, however, leaves much to be desired. The third
common feature is the need for a more active informative
and advisory role for IPAs. Here I believe the SSA countries
may well provide an interesting case study of how and
in which direction, the tasks and responsibilities of IPAs
may change over the next decade or more; and particularly
the ways in which they may interact with both foreign
and domestic firms and with a variety of extra-market
entities, including non-governmental organizations.
There have been a variety of studies which have looked
into the future of FDI in different parts of the world.
Most agree that although SSA countries (and particularly
South Africa) are likely to attract increasing
amounts of such investment, their share of FDI is
unlikely to increase in the foreseeable future. In my view,
this should not be of great concern to host African governments.
With the continued prosperity of the industrialized
countries and with some large developing countries,
notably China and India, becoming more attractive
locations to foreign TNCs, the lion’s share of inward FDI
is bound to elude much of the African continent. Much
more important is the absolute growth of FDI and an
improved quality of that FDI in Africa. Here the present
report is cautiously optimistic. The future annual sales
growth of eleven of the fifteen SSA countries considered
for 2006-2008 was expected to exceed that of 2005 and
sometimes, e.g. in the cases of Nigeria, Mozambique and
Senegal, by a considerable amount. According to
another study by the Economist Intelligence Unit and the
Columbia Program on International Investment published
in 2006, each of the four SSA countries considered
by it, namely Angola, Kenya, Nigeria and South Africa,
were projected to increase their FDI stock, by an average
of 42.5per cent between 2005 and 2010.
At the same time, these studies and those of the World
Bank and IFC cited earlier, and the World Investment
Report 2006 by UNCTAD pinpoint many of reasons
why the prospects for FDI in SSA countries are not more
favourable. Time and time again, issues to do with insufficient
institutional reform, lack of physical security, inadequate
property rights protection, corruption, opaque
policy making, poor infrastructure, restrictive labour laws
are emphasized in business surveys. For these and other
obstacles to be overcome, a change in the mindset of all
parts of SSA society may be necessary. Here again IPAs
may play an important brokerage role, both directly as
between governments and potential investors, and indirectly
by fostering partnerships between the latter (in
their various forms) and local firms (including both suppliers
and customers). Again initiatives in SSA countries
with respect to new forms of collaboration and networking,
may well be at the cutting edge of new organizational
forms of FDI.
I wholeheartedly commend this report. It deserves the
widest possible readership. But, perhaps, more importantly,
it can, and I very much hope will, be a trailblazer
for more extensive and even deeper studies into the role
FDI may play in helping to wake up the sleeping giant
that is Africa; but to do so in a way acceptable to the
African people and respectful of African culture and traditions.
Africa is a continent with huge potential for
exciting, meaningful and sustainable development. But
I am convinced this cannot be brought about by the unilateral
efforts of firms, governments, supranational entities,
consumers, workers or non-governmental organizations.
In our contemporary global scenario, with all its
uncertainties, complexities and volatilities, this can only
be accomplished by a multilateral partnership involving
each of these interested constituents. I believe that
UNIDO is uniquely well placed to act as a catalyst in
bringing these constituents together.
John H. Dunning, February 2007
vi Africa Foreign Investor Survey 2005