Multinationals "cautiously upbeat" on investment in Africa

French version

Bangkok, 15 February 2000 - One third of multinational companies that responded to a poll published today on foreign direct investment in Africa say they want to increase investment in the next three to five years. More than half the companies expect their investment to remain at present levels.

The assessment emerged from a poll that was conducted jointly by ICC and the United Nations Conference on Trade and Development (UNCTAD) during the second half of 1999. The results were announced at a press briefing at the UNCTAD conference in the Thai capital.

Only 6% of the 63 companies that responded to the survey said that they plan to decrease their investment or pull out of Africa altogether.

More than 40% of the respondents expect that Africa's overall prospects for attracting FDI will increase in the next three to five years compared with the past three years. Slightly more (46%) do not expect prospects to change.

The firms surveyed are among the world's largest multinationals as identified in UNCTAD's 1999 World Investment Report. Most have a presence in Africa but have less than 10% of their foreign assets there. Of those that responded, 87% said they had affiliates in Africa, while 13% indicated that they were not currently present in Africa.

The message emerging from the survey is clear: to quote Kofi Annan, Secretary-General of the United Nations: "The results of the UNCTAD/ICC business survey on the prospects for FDI in Africa are, indeed, encouraging. They show that it is indeed worthwhile for companies to have a closer look at investment opportunities in Africa".

ICC Secretary General Maria Livanos Cattaui added: "The inescapable conclusion is that foreign direct investment coupled with the grass-roots development of a viable private sector, are key to economic and social progress in Africa. Good governance, a transparent and predictable regulatory framework, the rule of law and a stable society all contribute to a hospitable investment climate".

An ICC-UNCTAD summary of the poll's conclusions said: "A significant number of responses showed that companies are cautiously upbeat about likely progress in improving investment conditions.

"Growth and size of local markets, and the profitability of FDI, are the most enticing factors - and were mentioned most frequently as influencing investment decisions of companies in a positive way," the summary said.On the negative side, the prevalence of bribery was by far the most discouraging factor, the responses revealed.

Many of the companies (73%) assessed the overall potential for FDI in Africa as "limited" and only 12% found it to be "very large" or "large". Half (51%) saw investment potential in tourism, followed by telecommunications - identified by 43% of respondents as an industry with potential for FDI.

Other industries in which a significant number of companies saw investment potential in Africa were petroleum, gas and related products (37%) and agriculture (30%) as well as mining and quarrying (37%) and foods and beverages and pharmaceutical and chemical products, which were named by more than 20% of the respondents.

The assessment of investment potential by industry varied according to region. The poll gave this profile, demonstrating that Africa's investment opportunities are perceived to be much broader than the traditional image of the continent merely as a provider of natural resources.

North Africa - Petroleum, gas and related products, telecommunications and tourism were the most frequently mentioned industries with development potential;

West Africa - Petroleum, gas and related products, mining, quarrying, forestry, agriculture and telecommunications;

East Africa - Tourism, followed with a considerable gap by telecommunications;

Central Africa - The few investment opportunies seen were mainly in mining and quarrying, and forestry;

Southern Africa - Tourism, transport and storage, ahead of telecommunications, mining and quarrying, agriculture, metals and metal products, motor vehicles, food and beverages, and pharmaceutical and chemical products.

South Africa was placed by the majority of respondents at the top of the list of the most attractive countries for FDI in Africa. Egypt came second, followed at some distance by Morocco and Nigeria. South Africa and Nigeria, together with Egypt, Morocco and Tunisia, account for the bulk of FDI inflows into Africa - and the survey indicated that the order is unlikely to change much in the immediate future.

South Africa was most frequently mentioned among countries that are expected to make the most progress in creating a business-friendly environment in 2000-03, followed by Egypt and Morocco. Then come Tunisia, Cte d'Ivoire and Ghana in that order.

Several least developed countries - among them Ethiopia, Mozambique, Uganda and Tanzania - were ranked in the list of countries seen as attractive destinations for FDI as well as of those expected to make the most progress in creating a business-friendly environment.

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