Inward investment in Africa (Foreign Direct Investment, or FDI) is the biggest priority in sub-Saharan Africa at present. It is now, for example, a personal goal of former Nigerian president Olusegun Obasanjo. In a recent interview with This is Africa [link/page no longer active], a new publication from the Financial Times, Mr Obasanjo discussed his “re-invention” as an investor. But he also emphasised the need for “effective management of such investments in a way that ensures they result in job creation and economic development.” He argued that GDP should not be the only way of measuring the effect of inward investment. “Governments and investors…should also consider the wellbeing of the people. If GDP growth is 10 percent per year, how many people have been lifted out of poverty? That should also be a concern.”
Of course good governance – and the perception of good governance – is crucial to attract inward investment. The problem still facing Mr Obasanjo’s native Nigeria, as in other African states is precisely poor governance which has failed to put an end to corruption, leaving the country’s oil refineries in disrepair and a huge missed opportunity to use the rich natural resources to develop the infrastructure so important to lifting people from poverty. As Victor E. Dike , founder of the Center for Social Justice and Human Development in California, USA, states, “In Nigeria the embezzlement of public funds is one of the most common ways of economic accumulation, perhaps, due to lack of strict regulatory systems.”
At the World Economic Forum, inward investment is always a major topic of debate, especially with this year’s focus on inequality. So it was appropriate that governance in Africa took centre stage for the “ Africa – From Transition to Transformation – Annual Meeting 2012 “ session. The name given to the session reflects the growing confidence in the continent to lift itself out of the perceived and actual problems that have plagued its people. But Africa still only receives about 1% of global inward investment, so much needs to be done, both in improving governance in Africa and improving its image as an attractive investment opportunity.
