The African Development Bank’s (AfDB) new envoy to the East Africa Community (EAC) said he will focus on attracting Foreign Direct Investment (FDI) coming to the region as a means of boosting economic growth.
“Of all the five regions of this continent, the EAC attracts the least FDI; we will work with individual countries as well as the region to change this; this region has very robust economies, large markets, consumer market, manufacturing base and large agricultural base and should be able to attract more FDIs,” Gabriel Negatu, AfDB’s new Director for East Africa, told Business Times in an interview recently.
Negatu, who was formerly in charge of Governance, Economic and Financial Reforms at the Bank, observed that, while the region has potential to attract more FDI, gaps in infrastructure, energy and creating an enabling environment limit its capacity.
“Rwanda is the country that has been ranked top most performer in the world in the Doing Business survey but there are other countries in this region that still have a long way to go; these are the kind of things that are seen to create a bidding constraint for FDI into the region,” he said, referring to 2010 Doing Business survey report by the World Bank.
According to the United Nations World Investment Report 2010, with $ 799m Uganda led other countries in the region in attracting FDI in 2009, while Tanzania got $645m, Kenya $149m and Rwanda $119m.
“Just because you have reformed (business) does not guarantee that money will come; there are minimum conditions for FDI flows — because as countries cope with each other for FDI, investors will look at these issues as minimum,” he said.
Negatu cited labour productivity, regulation on export of goods, expatriation of profit and different business regulations as key to attracting FDI.
“These are the core minimum that each country must have and for us (AfDB) the idea is not to compare one country with another, but to help the region as a whole become a magnet, to be a hub for FDI flows on the continent,”
The official also pledged to step up efforts towards addressing the region’s infrastructure gap.
“Whether it is in EAC or any other part of the region of the world, infrastructure remains the backbone of economic activity,” he said.