EAST Africa’s competitiveness for investment projects has waned, if the current drop in Foreign Direct Investments (FDIs) is anything to rely on.
The UN Conference on Trade and Development (UNCTAD) said here over the weekend that the East African Community (EAC) member states had by last year attracted a mere 14 per cent of the FDI inflows.
The UN agency described the regional drop in FDI inflows as significant, adding that it makes the region’s competitiveness for investment projects more challenging.
The revelations come amid FDI inflows to Africa bucking the global trend and registering an increase of six per cent in 2018, although most of the capitals went to North and Southern Africa.
UNCTAD Chief of Investment Promotion Section Paul Wessendorp disclosed here over the weekend that FDI inflows had fallen by 19 per cent
last year to an estimated 1.2 trillion US dollars, from 1.47 trillion US dollars in 2017. “This is the third consecutive drop, bringing FDI flows back to the low level after the global financial crisis,” said Mr Wessendorp during the opening session of the three-day Regional Seminar on Facilitating Investment in Sustainable Development Goals Projects.
Admitting that FDI was the largest source of external finance for developing nations, Mr Wessendorp observed that FDI had the potential of creating higherskilled jobs, facilitating diffusion of technology and improving access to international markets.
Mr Wessendorp noted that the resource implications in implementing Sustainable Development Goals (SDGs), which were on top of the agenda for the UN, the wider international development community and UN Member States, was substantial.
“According to UNCTAD estimates, developing countries alone face an annual investment gap of 2.5 trillion US dollars, which are required to achieve the goals,” said the UNCTAD official, adding that private sector investment, including FDIs, should be mobilised for SDG-related projects in areas like creation of decent work, power generation, infrastructure, water and sanitation as well as food security, climate change mitigation and adaptation, health and education.
EAC Secretary General Ambassador Liberat Mfumukeko, in a speech read on his behalf by Private Sector Development and Investment Promotion Officer at the EAC Secretariat Charles Omusana, said the EAC had structured its programmes to address all the 17 SDGs.
“The EAC Treaty requires the region to become a single conducive investment destination and be marketed as such.
Therefore, it calls upon us to harmonise our investment laws, policies and regulations, making them predictable and facilitative for cross-border investors and investments,” he said.
The secretary general disclosed that the region still has patent challenges that negatively affect its investment climate—non-tariff barriers, availability of affordable finance, power and other utilities; appropriate quality infrastructure; domestic private sector that remains mostly handholding and unpredictable investment regimes.
He urged investment promotion agencies (IPAs) to take the lead and advocate for better and conducive climate for investment to thrive in the region.
Tanzania Investment Centre Executive Director Geoffrey Mwambe appreciated UNCTAD support to development and execution of e-Regulations project that aims at enhancing pro investment services in the country.
The three-day workshop also featured participants and IPAs from all the six EAC partner states.