Africa has potential for more FDI inflows

2009-01-10 11:09:25
By A correspondent

Africa`s performance in attracting Foreign Direct Investments (FDIs) is exceptionally good due to availability of natural resources such as minerals, oil, gas and good promotional campaign efforts.

The recent Tanzania Investment Report shows that Africa has in place good investment and business environment.

Countries that have done well in attracting foreign investment include Algeria, Chad, Egypt, Equatorial Guinea, Nigeria and Sudan, which together accounted for 48 per cent. Over half of the FDI originated from the US, European Union, China, Malaysia and India.

Global flows of FDI have improved for the past three years in developing countries.

Asia and Oceania have continued to be the largest recipients of FDI as well as source of FDI among developing countries.

``The role of Foreign Private Investment (FPI) in the world economy is expanding, contributing significantly to the promotion of private sector investments, employment creation and economic growth.

FPI are also important in augmenting domestic investment capacity for production of goods and services in the economy and enhancing integration within an economy as well as competitiveness in the international trade,`` the Report says.

Given its importance in the financial globalization and the potential impact to the domestic economies, FPI tends to pose various challenges to individual recipient countries.

For instance, monitoring and evaluation of the inflows, maintaining macroeconomic stability, and undertaking institutional and policy reforms realise optimal benefits from the inflows.

These challenges oblige the developing countries to enhance capacity to compete in terms of attracting investments, gaining global market shares and improving social economic welfare.

Tanzania attracted FDI amounting to USD 330.6 million and USD 447.6 million of FPI, being an increase of 35.4 per cent. To ensure maximum benefit to the economy, Tanzania has been continually monitoring FPI using periodical surveys.

Tanzania has a greater potential to attract more FDI because of its continued political stability, promising prospects in the mining and petroleum sectors (gold, coal, oil and gas), tourism and agri-business, bio-fuel, sugar, cotton and agro-processing).

The EAC region received an annual average of USD 640 million of FDI. Tanzania received most of the FDI in the region.

Most of the FDI inflows went into the mining, manufacturing, wholesale and retail trade, finance and insurance.