Africa Today blog

The flagship African show in Press TV

Foreign Direct Investment to Africa: a force for good or ill?

Posted by AT on August 27, 2010

Africa Today 71
Topic: Foreign Direct Investment to Africa: a force for good or ill?
Broadcast Date: 24th August 2010
Presenter: Henry Bonsu
1- Miss Katharine Pulvermacher, Chief Executive, African Rainbow Consulting
2- Mr Kofi Mawuli Klu Chief Executive Commissioner, PANAFRIINDABA
Remote Studio:
3- Miss Geetha Tharmaratnam Principal, Investments & ESG, Aureos Advisers Limited

This is a wider discussion on where Foreign Direct Investment to Africa go, and what’s it doing to countries like Angola, Congo, the DRC, Equatorial Guinea, Ghana, South Africa and Zambia, and is it a force for good or ill?

Uganda and Tanzania are, for the third year in a row, among the top 12 recipients of foreign direct investment in sub saharan Africa, according to the latest United Nations Conference on Trade and Development (Unctad), World Investment Report. Investment in Uganda has surged over the past three years from $733 million in 2007 to $799 million last year. In Tanzania investment has remained steady at between $645 million and $680 million. The two countries were not affected by the global downturn in foreign investment, as well as commodity price falls – in marked contrast to their neighbours in Kenya.

With AID failing to improve the lives of Africans on the continent, some campaigners are calling for a new investment strategy that will attack the causes of poverty and deliver long term growth. They say free markets and foreign direct investments in Africa can stimulate economies and create the jobs the continent so badly needs. Currently about 60 percent of Africans are under the age of 24, which many dreaming of a future in the west that their homeland cannot provide. But how sustainable are these FDI’s and their interests in Africa. Are they operating a biased trading system to get the most out of her natural resources? Investors from Asia, the Pacific and South Asia have been criticized for their poor human treatment and disregard for business ethics, while those from western industrialized nations have been accused of long term exploitation. This week Africa Today finds out if Foreign Direct Investment – the billions that come in from governments and multinationals – is a force for good or ill.

For African countries to attract Foreign Direct Investments, they’re told to improve the business environment, and make changes that usually favour the investors. According to the research body African Economic Outlook, FDI inflows are important as a stable and long-term source of capital to promote industry and commerce, but the majority of FDI to Africa remains targeted to extractive industries, like oil, gas, and mining, in a relatively limited group of countries. This means big commercial developments financed by outsiders often have little positive impact on local communities and the wider economy. The World Bank in a recent report classified 24 African countries as oil and mineral dependent. It said these countries accounted for about three quarters of annual FDI flows over the past two decades. Given the global economic downturn, will these African states be able keep their investors and at what cost?

2 Responses to “Foreign Direct Investment to Africa: a force for good or ill?”

  1. Ahaa, its nice discussion on the topic of this post here at this weblog, I have read
    all that, so at this time me also commenting here.

  2. Just want to say your article is as astounding. The clearness on your
    put up is just spectacular and that i could suppose you are an expert in this subject.
    Fine with your permission let me to grab your RSS feed to keep up
    to date with coming near near post. Thanks one million and please keep up the rewarding work.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: