ECOSOC HOSTS AFRICAN FORUM FOR INVESTMENT PROMOTION

ECOSOC HOSTS AFRICAN FORUM FOR INVESTMENT PROMOTION

(Reissued as received.)

GENEVA, 16 July (UN Information Service) -- The Economic and Social Council (ECOSOC) this afternoon continued with its high-level segment on efforts to achieve sustainable development in Africa by holding a forum on investment promotion in the continent, featuring several high-ranking politicians and development chiefs.

The discussion focused on several ways to improve the economic and social climate in Africa, including cracking down on corruption, improving transparency and stimulating growth which, in turn, could stimulate investment.

Martin Belinga-Eboutou, the President of ECOSOC, said Africa must again become a productive member of the world economy, and for that to happen, everyone had to get involved.  Sustainable development was not possible without the efforts of heads of State, businessmen, union leaders and heads of development organizations and development banks.  It was hoped through the discussions that necessary steps could be identified to attract investment.  It was also hoped that plans of action to promote investment could be formulated. 

Hage Geingob, the Prime Minister of Namibia, said Africans were determined to produce the necessary economic and social environment to create an atmosphere of sustainable development.  Past attempts had failed because there had been no commitment or willingness on the part of African leaders to change the way they did business.  Africans had to own up to their own mistakes and failures, he continued.  Further, they had to get their political and economic fundamentals right.  That did not necessarily mean market-driven policies, but the private sector had to be given its proper place.  The private sector was a place of significant wealth.

Nitin Desai, Under-Secretary-General, Department of Economic and Social Affairs, said it was increasingly clear that if development was going to be dynamized, private investment and private business activity and involvement had to be increased.  It was clear that a basic quality of infrastructure was needed that allowed investment to take place, and an overall investment environment in terms of a regulatory climate and security.

Chief Bimbola Ogunkelu, Minister of Cooperation and Integration in Africa of Nigeria, said the New Initiative for Africa was a new beginning, a new journey towards practical modalities for bolstering practical cooperation and achieving a new Africa.  The recent Organization for African Unity (OAU) summit had combined two plans into a single initiative; what was significant was not only that, but the overwhelming consensus that African heads of State had granted the initiative.  There was a consensus among these leaders that a conducive environment had to be established in Africa for attracting widespread private investment.

Omar Kabbaj, President of the African Development Bank, said Africa's investment needs were both varied and enormous -- African countries had to invest to improve their productive capacity, their human capital, their social services, and their basic physical infrastructure.  If African countries were to achieve the international development goals set for 2015, average economic growth rates needed to reach 6 to 8 per cent from the current rate of around 3.5 per cent -- this in turn implied a significant increase in investment rates.

Carlos Magarinos, Director-General of the United Nations Industrial Development Organization (UNIDO), said UNIDO had prepared a paper called "Finding the Right Track for Industry in Africa:  Some Policy Issues and Options," which, among other things, pointed out that industrial growth in Africa depended crucially on raising the share of investment in national output.  Higher investment allowed new technologies to be embodied in production, and at the same time, technological progress drove investment growth.

K.Y. Amoako, Executive Secretary of the United Nations Economic Commission for Africa, said Africa would become an attractive force for foreign investments only when its own citizens began to invest in the African economy.  Regional integration was important and hence inter-African barriers to trade had to be eliminated to allow the creation of sufficiently large African business and market "space".

In the second half of the session, which occurred following a 90-minute break for three concurrent round table discussions, the chairmen of the various round tables briefed national delegations about their discussions.

Mr. Magarinos, who headed the round table on the investment climate in African countries, said there was a generally improved business environment in Africa, and there was a significant potential for foreign direct investment there, including many appealing current opportunities.

Jean-Louis Ekra, the Vice-President of the African Export-Import Bank, who chaired the round table on the financing of investment, said the discussion focused on two important points -- how could there be more long-term financing in Africa, and how could more financing find its way into the hands of entrepreneurs?  The Nigerian Stock Market had the highest return on investment in the world last year, but still there was a struggle to attract foreign investors.  The housing market failed in many countries.  The question, in both cases, was how to do better.  It was important to look at how development banks could play a role in the countries of Africa.  There was considerable support for strengthening African subregional programmes.  There was recognition that the continent needed to develop its own domestic savings.

Mr. Amoako, who chaired the third round table on infrastructure needs, said the meeting found, among other things, and not surprisingly, that infrastructure was one of the keys to growth for Africa and for Africa's global competitiveness.  It was found that Africa needed to put about 5 per cent of gross domestic product (GDP) in infrastructure investment, or about $25 billion annually over the next

10 years, and that domestic sources could not provide enough to meet that total.

The Council will resume its meeting at 10 a.m. on Tuesday, 17 July, when it will continue its high-level segment and hear statements from Ministers or senior officials from Iran, Belgium, Nigeria, Germany, Cuba, Croatia, Cameroon, Switzerland, Belarus, South Africa, Canada, Indonesia and Burkina Faso.

Statements

MARTIN BELINGA-EBOUTOU, President of the Economic and Social Council (ECOSOC), said Africa was not a continent which left people indifferent.  The objective was to contribute to anchoring sustainable development in Africa.  Africa must again become a productive member of the world economy, and for that to happen, everyone had to get involved.  This forum featured ministers, businessmen, union leaders, and heads of development organizations and development banks.  Without these people, it was not possible to achieve sustainable development in Africa.  It was hoped that through the discussions, the necessary steps could be identified to attract investment.  It was also hoped that plans of action to promote investment could be formulated.  The United Nations system as a whole was determined to support the work of the forum, which could make it possible to define the conditions of a dynamism of investment in Africa.  This was the first time such a forum was being organized.  This type of meeting could only come to an end when Africa had achieved sustainable development.  It was important to organize follow-up for what was being done today.

NITIN DESAI, Under-Secretary-General of the Department of Economic and Social Affairs (DESA), said today's forum was to try to inject something new into the ongoing United Nations debate on African development; it was increasingly clear that if development was going to be dynamized, you had to increase private investment and private business activity and involvement.  It was clear that a basic quality of infrastructure was needed that allowed investment to take place, and an overall investment climate in terms of a regulatory system and security; but the intent this afternoon was to move beyond that broad understanding into more specific ideas and suggestions that pertained especially to Africa, and to what could be done for Africa by the United Nations family.

HAGE GEINGOB, Prime Minister of Namibia, said the Lusaka Summit had been a watershed where African leaders had recognized the changing face of trade.  They had stated that Africa needed to take urgent and effective steps to avoid marginalization and to ensure that the continent became a partner in the world economic order.  The challenge was transferring this vision into a coherent programme of action.  Africans were determined to produce the necessary economic and social environment to create an atmosphere of sustainable development.  Past attempts had failed because there had been no commitment or willingness on the part of African leaders to change the way that they did business.  Africans had to own up to their own mistakes and failures.  Blaming outsides forces was not productive.  Of course, outside forces were not blameless.  Africans had to respect themselves and had to take themselves seriously.  Africa had to get its political and economic fundamentals right.  That did not necessarily mean market-driven policies, but the private sector had to be given its proper place.  The private sector was a place of significant wealth.  Citizens had to be made to feel that they had a stake in the way their countries worked.  That could be done by ensuring transparency, and ensuring that governance was carried out in an accountable manner.  Leaders needed to be accountable to their people.  Also necessary was a free press and a productive and honest opposition.  Corruption had to be condemned -- it had had a serious impact on all countries in Africa.

CHIEF BIMBOLA OGUNKELU, Minister of Cooperation and Integration in Africa, of Nigeria, said the New Initiative for Africa was a new beginning, a new journey towards practical modalities for bolstering cooperation and achieving a new Africa.  The recent Organization for African Unity (OAU) summit had combined two plans into a single initiative; what was significant was not only that, but the overwhelming consensus that African heads of State had granted the initiative.  There was a consensus among these leaders that a conducive environment had to be established in Africa for attracting widespread private investment; to that end, there was a commitment to establishing stable peace, and an understanding that achieving such peace was attainable through ensuring respect for basic rights and establishing good governance, democracy, and public security.  It was understood that ultimately the private sector would play the pivotal role in economic growth on the continent, and that to get to that position it was necessary to enhance the capabilities of Africans, improve and expand education, establish better management of public revenues and expenditures, and build sufficient infrastructure.

The New African Initiative would be brought before the General Assembly in September, Chief Ogunkelu said; it must not become just one more United Nations programme for Africa; it must remain an African programme, based on African direction and management, but with extensive international support.

OMAR KABBAJ, President of the African Development Bank, said Africa's investment needs were both varied and enormous -- African countries had to invest to improve their productive capacity, their human capital, their social services and their basic physical infrastructure.  If African countries were to achieve the international development goals set for 2015, average economic growth rates needed to reach 6 to 8 per cent from the current rate of around 3.5 per cent; this in turn implied a significant increase in investment rates.

To increase levels of investment, African countries should, among other things, continue efforts to maintain a stable and credible macroeconomic environment; continue to improve governance systems, particularly those pertaining to legal systems and regulatory frameworks so that conditions were established for private-sector-led growth; deepen and promote increased mobilization of domestic savings; modernize government institutions to enable them to provide essential public goods and services efficiently, with particular attention to the creation of frameworks and regulatory systems to encourage public/private partnerships in the provision of infrastructural services; and invest in human capital, including through a concerted response to the HIV/AIDS pandemic, so as to develop a competitive and skilled labour force.  Such domestic policies should be complemented by support from Africa's development partners, Mr. Kabbaj said, among other things by a reversal of the long-term decline in official development assistance (ODA) and by a reduction of tariff and non-tariff barriers that limited African exports.

The African Development Bank Group had been a major source of investment resources for regional member countries since 1967, Mr. Kabbaj said, and through the year 2000 had approved over $37 billion in loans and grants for the continent; it aimed at reducing poverty and promoting sustainable economic growth.

CARLOS MAGARINOS, Director-General of the United Nations Industrial Development Organization (UNIDO), said UNIDO had prepared a paper called "Finding the Right Track for Industry in Africa:  Some Policy Issues and Options."  Among other things, the paper addressed the issue of investment through the prism of industrial development.  It was understood that industrial growth in Africa depended crucially on raising the share of investment in national output.  Higher investment allowed new technologies to be embodied in production, and at the same time, technological progress drove investment growth.  The interrelationship between investment and growth could be either a virtuous circle or a vicious circle.  High growth could stimulate investment by raising aggregate demand and encouraging technical change.  Growing incomes allowed savings to increase so as to finance growing investment.  Yet Africa risked being caught in a trap where poverty limited savings, low demand limited investment opportunities, and low investment inhibited structural change and productivity growth.  Breaking out of this situation would require efforts to mobilize domestic savings, improve effectiveness of financial institutions channeling funds from savers to prospective investors, improve investment incentives and enhance efficiency of investment.

K. Y. AMAOKO, Executive Secretary of the Economic Commission for Africa (ECA), said it had to be noted that the private sector was already playing an important and increasing role in fostering development in Africa; that under an appropriate policy environment the climate for private investment could be expected to improve over time; and the challenge for Africa was to deepen and replicate the best practices in the field of private investment that were increasingly being implemented in Africa.

Africa would become an attractive force for foreign investments only when its own citizens began to invest in the African economy, Mr. Amaoko said.  Regional integration was important and hence inter-African barriers to trade had to be eliminated to allow the creation of sufficiently large African business and market "space"; and the economic empowerment of African women was key to the development process -- women should be as influential as men in affecting the investment process in Africa.  Governments, for their part, had to provide a sound and effective regulatory framework for business and investment, and had to provide transparent and effective governance.  Investment promotion agencies in Africa should be endowed with funding and human support to pursue these aims.

Mr. MAGARINOS, Director-General of UNIDO and Chairman of the round table on the investment climate in African countries, summarized the session by saying that there was a generally improved business environment in Africa; that there was a significant potential for foreign direct investment there, including many appealing current opportunities; that the situation in individual African countries increasingly differed from one country to the next and it was necessary to differentiate from country to country, from sector to sector, and from opportunity to opportunity; that Africa had an image problem that had to be corrected; that obstacles related to problems of development in general (poor infrastructure, lack of skills), external factors (such as market access, debt burdens, and declining official development assistance), and problems with domestic regulations and administrative capacity (involving such things as unnecessary red tape); and that what needed to be done included things to be done by African countries themselves, such as to continue structural reforms and improve economic and financial transparency and good governance, and things to be done by international organizations, such as enhance public/private partnerships, enhance ODA flows, transfer technology, improve the capabilities of African entrepreneurs, and remove barriers to trade that hindered African countries.

JEAN-LOUIS EKRA, Vice-President of the African Export-Import Bank and Chairman of the round table on the financing of investment, said the discussion had focused on two important points -- how could there be more long-term financing in Africa, and how could more financing find its way into the hands of entrepreneurs?  The Nigerian Stock Market had the highest return on investment in the world last year, but still, there was a struggle to attract foreign investors.  The housing market failed in many countries.  The question, in both cases, was how to do better.  It was important to look at how development banks could play a role in the countries of Africa.  There was considerable support for strengthening African subregional programmes.  There was recognition that the continent needed to develop its own domestic savings.

Mr. AMOAKO, Executive Secretary of the ECA and Chairman of the round table on infrastructure needs, said the meeting found, among other things, and not surprisingly, that infrastructure was one of the keys to growth for Africa and for Africa's global competitiveness.  It found that Africa needed to put about 5 per cent of GDP in infrastructure investment, or about $25 billion annually over the next 10 years, and that domestic sources could not provide enough to meet that total.  There was an important need to create an enabling environment for infrastructure development -- the correct legal and regulatory framework, for example, which did not happen quickly but took at least five years.  It was clear that infrastructure needed not only initial development, but maintenance -- that was a lesson painfully learned in the past.  It was understood that African nations should work more at a regional level to secure -- often through public/private partnerships -- the ability to carry out heavy infrastructure projects.  It was similarly believed that investments in information and communications technology were vital, as such technology was increasingly necessary for connecting to the globalized economy.  And it was especially recognized that investments in education were vital and that it was time for people to stop talking and get working.

RUBENS RICUPERO, Secretary-General of the United Nations Conference on Trade and Development, said much of the discussion on Africa had been about the low level of investment there.  Judgements should not be passed until other things were tried.  International organizations could much improve their coordination and join efforts.  In Brussels, several international organizations came together to help attract investments for Least Developed Countries (LDCs).  In Uganda, investment had helped produce an investment guide, and the country had conducted an investment policy review.  This could be multiplied all over the continent.  Private firms that published guides for investment were not interested in LDCs because there was no money for investment.  That was why there needed to be

coordination among international organizations.  Likewise, there was promotion via round tables and conferences that brought governments together.  There would be a round table on investment in Tanzania in October.  There were also efforts to helped LDCs negotiate bilateral agreements.  Nowadays, if it was considered that most African countries had more than a market access problem, they would need investment -- investment that would bring technology and the global chains of production and distribution.

KWESI NDUOM, Minister for Economic Planning and Regional Cooperation of Ghana, said some specific suggestions were that Poverty Reduction Strategy Papers should be broad enough to include the consideration of private-sector development and how to encourage accumulation of capital for small- to medium-sized enterprises; that debt relief through the Heavily Indebted Poor Countries (HIPC)initiative should be applied in a way that did not threaten growth of the private sectors of African countries; that donors should provide direct investment support through local intermediaries, and that for international agencies priorities should be reoriented more towards local projects; that a "good governance" dividend of 20 per cent more official development assistance should be given to governments that showed concrete advances in establishing and stabilizing democracy; and that domestic entrepreneurs should be helped and encouraged, through finding long-term capital for them, as no country to his knowledge had succeeded in long-term development without a solid base of small and medium-sized entrepreneurs.  It also was advisable, in his opinion, for countries to establish a zero-tolerance policy on corruption and to prosecute those who participated in corrupt practices, including government officials.  The other important aspect of that was to pay government officials sufficiently well that they did not have to engage in corruption simply in order to earn enough money to survive.

MARIA LIVANOS CATTAUI, Secretary-General of the International Chamber of Commerce (ICC), said sometimes what had been accomplished was not seen.  Often, these steps were modest and taken over time.  Many countries had good governance practices, but had not seen the investment benefits.  No countries could develop without local entrepreneurs.  Good bureaucracy was very attractive when investors were considering a country.  Companies were not putting money into the analysis of what was happening in individual countries.  The ICC, working with UNCTAD, had been working towards trying to clarify the improvements in these countries.  It had not been looking at the macro-picture.  It was looking at the micro-picture, for example, the revamping of the entire judiciary of a country.  The international community had to get over the generalized image of countries. 

Mr. DESAI, of the Department of Economic and Social Affairs, summarizing the day's debate, said the reality was that investment flowed once people sensed an opportunity, a potential for profit, a need to take advantage of a good occasion to get in on the ground floor of a growing thing.  The purpose of helping African countries develop their capacities was to get them to that point, and it was clear that the United Nations could help in many ways.

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