MIGA roundtable on foreign direct investment policies in Africa : proceedings and lessons

Over the last few years, many African governments have made it an important policy objective to attract more foreign direct invesment (FDI) into their countries. During the 1970s and 1980s, the annual flow of FDI into most African countries stagnated at very low levels. The nineties hold out as a challenge and an opportunity to improve this unsatisfactory performance. The MIGA roundtable discussed a variety of subjects and reached a number of conclusions. First, African countries that are currently going through a variety of crises can and ought to seize the opportunity to adopt far-reaching policy reforms changing their economies in the direction of a free enterprise and free-trade system. Second, there is a need to maintain a political environment that is stable, predictable, and attractive to foreign investors; to create a legal system that is equitable and efficient; and to introduce a system of governance and day to day management of the economy, that is at the same time efficient and sympathetic towards the needs of the private sector. Third, African countries need to undertake a major promotion effort in order to inform foreign investors of successful economic and political reforms. Fourth, African countries should pursue diligently and conscientiously the economic reforms initiated and at the same time step-up promotion efforts between the time of policy implementation and a sizable response by foreign investors (this can easily reach 6 to 8 years). Fifth, based on the examples set by a significant number of African countries, the level of economic and social development is comparable to the one the now-successful developing countries had attained at the time they started their successfully economic growth policies (Thailand, Malaysia, Turkey and others). In conclusion, the Roundtable recommended fundamental change in economic policies away from overly contolled, inward-looking, public sector based strategies to free market based, outward-looking policies, sympathetic to the private sector and rewarding private initiative.