ECA and UNCTAD launch proposal to promote African investment

Instability and weak economies are undermining attempts to attract investors into Africa, the UN Conference on Trade and Development (UNCTAD) said on Monday. Conflicts in Sudan’s troubled Darfur region and the Ivory Coast also have the potential to drive investors out of other African countries, Anne Miroux from UNCTAD said. She said instability created a "ripple effect" in terms of image across the continent. "Africa has a very bad image," Miroux, from the Geneva-based organisation, told journalists in Addis Ababa at the start of an initiative to attract investors to Africa. UNCTAD and the UN’s Economic Commission for Africa (ECA) are aiming to help African countries properly analyse investment flows to help improve government policies. "People associate what is happening in Sudan with what is happening in countries like Senegal or Mali - that are more peaceful countries," she said. "What is happening in Ivory Coast is terrible for foreign investment because this country was once a pearl," she continued. "What has been happening in the past two or three weeks has a very negative impact on the image of that region and there is some ripple effect on the whole African continent because the Ivory Coast was supposed to be a relatively stable country." Still, despite the negative image, foreign investment in Africa is likely to leap by more that 20 percent this year, she added. Miroux said booming commodity markets in areas like oil are drawing in foreign funds. Africa, the world’s poorest continent, has the lowest levels of foreign investment, roughly totalling US $15 billion a year – accounting for just three percent of world investment flows. Angola, Equatorial Guinea, Morocco, Nigeria and Sudan attract the largest amount of foreign investment, mainly due to oil reserves found in the countries. Foreign direct investment into the world’s 30 OECD countries was $384 billion in 2003. China alone attracts the largest inward flows at $53 billion. However, countries like Ethiopia have enormous potential for investors, UNCTAD said, pointing out that the domestic market alone has some 70 million people. Experts from 12 African countries are looking at establishing a regional centre of statisticians to "harmonise" information and data to help increase investments from abroad and between African countries. Augustin Fosu, director of the ECA's economic and social policy unit, stressed that investment played a crucial role in development. He added that greater investment encourages macro-economic stability, acts as an engine of growth and provides vital foreign exchange. "Africa has to tap foreign capital in order to raise the productivity levels necessary for sustained increases in living standards of its population," Fosu said. "There is no doubt about the essential importance of FDI [foreign direct investment] flows to Africa in complementing the national development efforts, particularly to consolidate infrastructure development, enhance technology transfer, deepen productive linkages and boost overall competitiveness. "Unfortunately in most African countries the availability, accuracy, timeliness and comparability of FDI statistics remain a serious issue that should be addressed as a matter of urgency."