By Kuvee Kangueehi
Efforts by many African governments on investment promotion initiatives are being frustrated by the fact that Africa only gets a tiny fraction of foreign direct investment (FDI), which mostly goes into exploiting its resources, Minister of Trade and Industry, Dr Hage Geingob, said.
He noted that the FDI is mostly in extractive industries including oil, diamonds, gold, uranium and platinum and these investments would come even without incentives.
Geingob made these remarks last week in London when he addressed the Africa Business Forum 2008, under the theme “Accelerating Investment in Africa: Improving the Investment Climate”.
The trade minister said African governments give these foreign investors generous incentives, resulting in minimal benefit accruing to citizens and once the mine is exhausted, the host government is left with an ecological nightmare and continued poverty.
He noted that there is need to build capacities to ensure a fair deal for investors and the host country.
The former Premier also informed the gathering that African states also face unfair challenge from developed countries that subsidise their agricultural products and fall prey to such unfair challenge because of inadequate capacity to take up the issue at the World Trade Organisation (WTO).
In one of his maiden speeches since his appointment as trade minister, Geingob noted that Africa is forced to play by trade rules dictated by Western governments, who have real power within the WTO.
“African countries are obliged to pen their markets to Western products, but the West ignores its reciprocal obligations at will.”
The minister, however, did not entirely blame Western countries for the current situation and said African countries have remained oblivious to the need to define the parameters for imports of goods and labour.
“Many of our countries do not even have standards organisations, our immigration laws are often weak and legal instruments relating to FDI are not up to date.”
He added that despite the conditions, everything is not gloom and doom and many African countries have embarked on international reforms of their business regulatory systems, policies, institutions and even modes of governance to reduce red tape.
Geingob said the African Union, its development programme, Nepad, and the G8 countries all recognised the need for a vehicle to improve investment in Africa through the establishment of the investment climate facility (ICF).
“The ICF is a new private-public partnership, focused on improving the continent’s investment climate.”
He said the mission is to make Africa an even better place to do business in, by removing obstacles to domestic and foreign investment and by promoting Africa as an attractive investment destination.
He told the gathering that other efforts for creating larger markets are underway through free trade arrangements in regional economic groupings.
In the concluding statement, the chairperson of the Commonwealth Business Council, Paul Skinner, said the two-day discussions testified to the optimism of African business and international investors in the future of the continent.
He noted that although Africa faces huge challenges, the latest being the shocks of rising energy and food prices and political conflicts, the enthusiasm and confidence of business leaders in Africa is palpable.
“Although we are lagging behind in meeting the MDGs (millennium development goals) targets in Africa overall, there are clear signs that in many countries long-term problems are beginning to be addressed and overcome.”
Skinner urged the G8 to back the efforts of business and UN agencies within the Global Alliance for Improved Nutrition (GAIN) to support CAADP (Comprehensive Africa Agriculture Development Programme) and to invest in private sector led strategies to combat under nutrition, including a proposed food security safety net to protect 400 million most-vulnerable Africans, especially children.
Almost 500 representatives from business and government attended the forum, which took place at the Whitehall in London.
The Prime Minister of Cameroon, Ephraim Inoni, and Prime Minister of the Kingdom of Lesotho, Bethuel Mosisili, also addressed the two-day gathering.
Messages were sent from Egyptian President Hosni Mubarak and the President of Senegal.
Ministers from Cameroon, Lesotho, Malawi, Mozambique, Namibia, Nigeria and the United Kingdom addressed the forum, as well as 40 business leaders from Africa and Europe.
The forum was convened to review international and African efforts to support growth in Africa and progress towards the MDGs and to set out a framework for continuing business partnerships with governments on economic reform.