Photo: Dr Vera Songwe, the executive secretary of the United Nations Economic Commission for Africa (UNECA), addressing Africa Business and Investment Forum in Addis Ababa on January 30 on the margins of the African Union (AU) Summit. Credit: Jessica Hope - Photo: 2018

Africa’s Mounting Thirst for Foreign Direct Investment

By Jeffrey Moyo

HARARE | ADDIS ABABA (IDN) – He was just 17 when his country Zimbabwe gained independence. Now, 38 years later, Trynos Hove is over half a century old and what he remembers is persistent underdevelopment and repeated calls for foreign investment.

Without meaningful foreign direct investment in this Southern African nation, says Hove, suffering will continue for the majority of citizens who are now bearing the brunt of joblessness.

“I’m one of the Zimbabweans who are without employment today. I worked for Lever Brothers before I was sacked as the company scaled down operations owing to the failing economy here,” Hove told IDN.

Hove worked as a human resources officer at Lever Brothers – a British manufacturing company founded in 1885 by brothers William Hesketh Lever and James Darcy Lever – and his situation exemplifies the crisis that has been facing Africa as a continent over the years, according to economists and development experts.

“From Cape Town to Cairo, African countries are still crying for foreign direct investment. The continent’s own people have invested very little on their own land. Rich Africans who have accumulated wealth through corrupt means have externalised their dirty money (billions of dollars) to offshore accounts and, as a result, Africa can hardly grow,” Kingston Nyakurukwa, an independent Zimbabwean economist, told IDN.

With the African continent mired in economic woes that have pounded it over the years, the United Nations Economic Commission for Africa (UNECA) and the Corporate Council on Africa (CCA) – the leading U.S. business association focused on connecting business interests in Africa – organised ‘Africa Business and Investment Forum’ on January 30 in the Ethiopian capital Addis Ababa on the sidelines of the African Union (AU) summit. It was purported to capitalise on the continent’s attractiveness to foreign direct investment.

“Given the presence of so many African heads of state as well as senior African officials who attended the AU summit, UNECA saw this as an excellent opportunity to enable African and U.S. private sector executives to engage in conversations and share insights with African heads of state and ministers on ways to support private sector-led growth in Africa,” Florizelle Liser, president and CEO of CCA, told IDN.

The Addis meeting served as a high-level platform for U.S. and African private sector engagement with African heads of state, ministers, senior U.S. government officials, and multilateral institution representatives.

During the meeting, one of the areas of particular importance was why Africa needs to attract more foreign direct investment (FDI), and why the continent is an attractive prospect for world investors, considering its rapid urbanisation and massive youth population.

According to Hove, in order to bring more investment to the continent, “corruption has to be abolished, transparency has to be upheld and leaders have to become more accountable. Unless all this is done, Africa will remain legging behind in terms of development.”

However, attracting more FDI to Africa requires an overhaul of policies to create an enabling environment for enhanced regional and global trade and investment, according to experts.

UNECA Executive Secretary Dr Vera Songwe told IDN that “African countries have been clear on the policies they need to overhaul for enhanced regional and global trade. These are captured clearly in what is known as the Action Plan for Boosting Intra-African Trade (BIAT).”

Songwe said there are “seven pillars under which these policies that need concerted reforms and investments fall: trade policy; trade facilitation; transboundary infrastructure; productive capacity enhancement; trade finance; trade information; and factor movement.”

According to Songwe, these reforms will go a long way towards creating an environment that will position Africa to attract investments and, as a result, these investments are likely to be different to what we have seen in the past, with the manufacturing and services sectors being major growth areas.

However, for retrenched industrial labourers like Donemore Masukume from Harare’s Mabvuku suburb, a low income suburb in the Zimbabwean capital, the private sector is as good as dead. “Industries in their numbers closed shop here and there is no growth to talk about,” he told IDN.

Masukume’s pessimism is matched by the optimism of UNECA officials like Dr Songwe. “To transform Africa,” she said, “we would need to work with governments and the private sector to see how we can first of all identify within the continent’s pockets of dormant capital and create frameworks around which these resources can be used for investment on the continent. We will support implementation of policies that help boost economic diversification and industrialisation.”  

Yet as investors look at investing in Africa, many entrepreneurs like Lin Yeng, a Chinese glass businessman, now feels it is a risk sowing investments on the underdeveloped continent. “There are many backdoor payments one has to make to many government officials before starting any meaningful business and I am personally tired,” Yeng told IDN.

Conducting business in Africa is not a walk in the park, officials admit. “Doing business in Africa can be challenging, but businesses that are already operating in Africa understand that to be successful, they must be present (not just doing business from an office outside the country), patient, and will do better if they have a reliable local partner,” according to CCA head Liser.

As the UNECA and CCA convention came to an end, Liser said: “Our CCA members, and guests at the Forum, were hugely encouraged to hear from our continent’s leaders that Africa is an attractive destination for investment. Today was a great opportunity for UN and AU leadership to hear the voice of international private enterprises and investors who want to do business with Africa, and ensure that business relations between the United States and the continent continue to grow.”

Meanwhile, for ordinary Africans like Hove, it may be too early to celebrate amidst mounting joblessness. “Talk, mere talk with no action on the ground, will keep rendering us jobless. I personally need a job, just a job.” [IDN-InDepthNews – 05 March 2018]

Photo: Dr Vera Songwe, the executive secretary of the United Nations Economic Commission for Africa (UNECA), addressing Africa Business and Investment Forum in Addis Ababa on January 30 on the margins of the African Union (AU) Summit. Credit: Jessica Hope

IDN is flagship agency of the International Press Syndicate. –

Related Posts

Begin typing your search term above and press enter to search. Press ESC to cancel.

Back To Top