PRESS CONFERENCE ON BUSINESS INVESTING IN AFRICA

A press conference entitled “Business Investing in Africa” reported on a meeting earlier today with government and business leaders of the Investment Advisory Council (IAC) for the Least Developed Countries and United Nations Secretary-General Kofi Annan on concrete steps to increase foreign direct investment (FDI) in Africa, which presently received only about 1 per cent of total investment flows. 

What happened today had ushered in a new era for Africa, said Alhaji Tukur, a business executive in Africa.  Formerly, Africa’s private sector had only been seen and never heard.  Now, there was impetus to create wealth and alleviate poverty in Africa, and to give promise to direct foreign investment needed there.

Indeed, the private sector had a great deal to offer Africa, but the potential had not yet been unlocked, said Lord Cairns, Chairman of the Commonwealth Development Corporation.  As unpalatable as it was to conclude, at present, the risk adjustment returns in Africa were not very competitive.  There was a range of reasons why investors were parking outside Africa, including the size of the economies, an inability to create a critical mass of consumers or to get goods in and out of countries on time.

Participants in the briefing included:  Rubens Ricupero, Secretary General of the United Nations Conference on Trade and Development (UNCTAD); Maria Levanos Cattaui, President of the International Chamber of Commerce; Michael Treschow, Managing Chairman of Electrolux; Alhaji Bananga Tukur, Chairman, African Business Roundtable; Habid Ouane, spokesperson for UNCTAD; Wisman Nkuhlu, Chairman, Steering Committee of the New Partnership for Africa’s Development (NEPAD); and Lord Cairns, Chairman, Commonwealth Development Corporation.

Mr. Ricupero explained that the Advisory Council was created less than one year ago at the Brussels Conference on Least Developed Countries.  It had gained a new dimension since it was now serving NEPAD, the new African initiative, and it had been expanded to cover all the needs of African countries in terms of private direct foreign investment. 

The Council had a close partnership with the countries represented in the International Chamber of Commerce and UNCTAD, and had already taken practical steps, such as publishing investment guides for least developed countries and conducting policy reviews, he added.  Indeed, the Council was created to provide a platform for people from the private sector to discuss with African governments the opportunities and the problems, and how to solve them. 

Mr. Treschow added that one aspect of the discussion had been about how to offset the risk of investments, such as through the banking centre and insurance polices.  Training and education had also been discussed, as well as how to use business practice and initiatives for that purpose, and how to use universities as a basis for research and development.  Determining the links between domestic companies and multinationals was also examined.

Mr. Tukur said that, as an executive president of a private sector organization, he sought to strengthen the African business round-table capacity to

improve the FDI into Africa and ensure that the private sector had the opportunity to “partner” properly with the public sector there.

Asked why foreign investment did not go to Africa and why that continent  was “shunned” from even acquiring the minimum level of private investment,

Mr. Treschow said that the major reason was the questionable attraction of Africa’s investments and its returns.  Business today had much more to choose from than 10 or 20 years ago, and it also specialized more.  So, with more choices for investors and more competition for their business, attracting investment money was much tougher today than ever before.

In some countries, Mr. Tukur said, he might have to work alongside the donor community to create the returns that the private sector needed.  He hoped to develop ways, with the help of the donor community, to create the environment that would make it possible to kick-start the economies that were getting a very small return. 

To a question about whether the issue had more to do with the fact that Africa was not strategically important to the United States, like China and Russia, or elsewhere, Steve Lennon, Senior Vice-President of Eskom in South Africa, speaking from the floor, said that if investments were structured correctly, then there was very good business to be done in Africa.  The key to some of today’s messages was that it was not just a matter of foreign investors coming in o Africa, but the need for Africans themselves to invest there, too, and create an enabling environment for investors.

Mr. Tukur said the playing field should be levelled.  There was a lot of “over-governance” in Africa -- government had a lot of business, and private business could not compete with it.  That was why private investors were not investing in Africa.

Mr. Ricupero added that, in each case, the International Chamber of Commerce was working together with UNCTAD and the government of a particular country, as well as with the local private sector and investors, to review the actual practices and try to remove the obstacles.  That process was already generating a much higher level of interest for investment opportunities.  Although FDI in Africa was very low in some areas or did not produce high returns, that was not the general situation.

Because of natural resources such as diamonds and oil, actual returns on investments in Africa had been quite high and, in some cases, even higher than in other regions, Mr. Ricupero continued.  At the same time, he was also trying to bring together investors and people in the public sector to examine concrete opportunities for creating new industries. 

Lord Cairns said that, once inside a country, international business would wish to play a role in good governance and other things alongside its rent-driven activities, in order to play its part as a good corporate citizen.  That was in the mandate of nearly all global companies that invested, and that was something that governments needed to establish -- a code of conduct under which businesses could operate.

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