Africa Foreign Investor Survey 2005 - unido

Preface
Investment is the key to unlock the development potential of countries, playing a critical role in converting comparative
advantages into competitiveness. Recognizing this reality, governments offer an array of incentives to attract inward investment,
with the expectation of attracting such spin-off benefits as advanced skills, know-how and technology.Though a few
countries have built up impressive competitive capabilities and effective national industrial innovation systems to support
development, similar success stories are rare in the majority of developing countries. The reality of foreign direct investment
(FDI) is that it continues to flow to selected locations that are able to meet a few critical requirements of foreign
investors with regard to the regulatory framework, costs, human resources factors and infrastructure.
The long-term competitiveness of developing economies rests on the development of technological capabilities. To determine
the type and extent of technological capability building required for local firms to increase productivity through partnerships
with foreign investors, detailed company-level data is required. But this is often constrained by methodological
problems and data limitations. This report attempts to fill such a vacuum.The central thesis of the Africa Foreign Investor
Survey is that African countries need to study the motivations, operational characteristics, and dynamics of different
investor groups, in order to be able to forge better promotion strategies responding to investors’ needs. The Survey reveals
a number of new trends, such as the emergence of foreign investors coming from the South.These firms are equipped to
cope with the exigencies of doing business in the investment climate prevailing in many parts of sub-Saharan Africa.
Chapter 1 introduces the subject matter, with a focus on the patterns of FDI flows and the role of technical cooperation
programmes. Chapter 2 explains the methodology of the Survey. An overview of FDI in 15 countries is presented in Chapter
3. Chapter 4 highlights the size profiles of different subgroups of investors, while Chapter 5 analyses the performance,
using selected indicators. Chapter 6 focuses on the impact of FDI on local economies, followed by highlights of the foreign
trade profile in Chapter 7. Chapter 8 analyses location factors and indicates differences in their perception between
2003 and 2005 Surveys.
The report is intended to further a deeper understanding of the dynamics of FDI flows to Africa. Its findings are expected
to influence the policy dialogue and the creation of the required determinants for enhanced FDI flows as a stimulus for
dynamic economic development in African countries.
Kandeh Yumkella
Director-General
United Nations Industrial Development Organization
Preface
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