NEPAD-OECD AFRICA INVESTMENT INITIATIVE 1
Presentation outline 1. CONTEXT 2. GOALS & DESIGN 3. ACTIVITIES & WORK METHODS 4. EXPECTED IMPACT 5. GOVERNANCE 2
1. CONTEXT Investment is a driver of economic development and poverty reduction, but obstacles to investment keep African country investment rates low 3
Africa s poverty rate is declining, but is unlikely to meet MDG target % 60 50 40 Population living on less than $1 a day Actual (Sub- Saharan Africa) Path to goal 30 20 10 0 1990 2000 2007 2015 Source: UN-OECD 4
Africa attracts a small share of global FDI, yet relative to GDP, FDI is large and rising Share of global FDI inflows, 2006 Asia and Oceania 23.5 % Americas 25.1 % Africa 2.7 % Source: UNCTAD-OECD Europe 48.7 % % 30 25 20 15 10 5 0 FDI inward stock as % of GDP, 2006 1985 1990 1995 2000 2005 2006 Source: UNCTAD-OECD Africa World 5
but mostly in oil-rich countries... Tunisia Source: UNCTAD-OECD Morocco Algeria Libya Egypt Mauritania Niger Cape Verde The Gambia Senegal Mali Chad Sudan Eritrea Guinea-Bissau Guinea Burkina Faso Djibouti Sierra Leone Liberia Côte d'ivoire Nigeria Togo Benin Ghana Cameroon Central African Republic Ethiopia Somalia Sao Tome & Principe Equatorial Guinea Gabon Congo Dem.Rep. Congo Rwanda Burundi Uganda Kenya FDI inward stock as a % of GDP (2005) Tanzania Seychelles Net oil importer Net oil exporter Angola Zambia Malawi Comoros Above 30% Above 30% Zimbabwe Mozambique Madagascar Mauritius 15% to 30% 15% to 30% Namibia Botswana Below 15% Below 15% South Africa Swaziland Lesotho 6
Investment climates still need much improvement so as to attract FDI The cost of doing business in Africa remains the highest in the world: 7
Low savings rates limit Africa s growth potential Savings trends: regional comparison per decade 8
and domestic investment rates therefore also remain very weak. Tunisia Business investment as a % of GDP (2005) Morocco Algeria Libya Egypt Above 20% Mauritania Niger 10% to 20% Cape Verde Senegal The Gambia Mali Chad Sudan Eritrea Below 10% Source: UNCTAD-OECD Guinea-Bissau Guinea Sierra Leone Liberia Côte d'ivoire Burkina Faso Nigeria Togo Benin Ghana Sao Tome & Principe Equatorial Guinea Cameroon Gabon Congo Central African Republic Dem.Rep. Congo Uganda Rwanda Burundi Ethiopia Kenya Djibouti Somalia Tanzania Seychelles Angola Malawi Comoros Zambia Zimbabwe Mozambique Madagascar Mauritius Namibia Botswana Swaziland South Africa Lesotho 9
2. GOALS & DESIGN STRUCTURE Advancing private sector development in African countries 10
Objectives of the Initiative To support and strengthen the capacity of African countries to identify and implement concrete policy reforms that improve the investment climate To raise the profile and image of Africa as a place in which to invest To facilitate regional co-operation among African countries To strengthen Africa s voice in international dialogue on policies for investment 11
Design principles of the Initiative Demand-driven, African-led partnership with NEPAD and OECD support Focused on areas of technical need and where OECD experience and expertise add maximum value Cost-effective, process-based and result-oriented, with outcomes aimed at impacting policy development and capacity-building within African governments Complementary and in co-operation with other institutions active in the field (e.g. World Bank, AfDB, RECs, UNECA, UNCTAD) 12
Value added from OECD co-operation with NEPAD A partnership approach to policy capacity building, based on experience-sharing and peer learning The availability of multilaterally-backed investment policy tools which African countries can adapt and develop to their specific needs Comprehensive, coherent and process-oriented policy assessments Mobilisation of other fields of OECD expertise and its role as a facilitator A forum for conditionality-free policy co-operation and dialogue with the world s major investing countries 13
Political support for the Initiative is strong African countries need to build a much stronger investment climate: we will continue to help them do so, including through the promotion of a stable, efficient and harmonised legal business framework", noting "the improvement of the investment climate through the OECD-NEPAD Investment Initiative". G8 Heads of State Communiqué on Africa, Gleneagles, July 2005 "We will individually and collectively continue to support initiatives which address the investment climate, such as the NEPAD-OECD Africa Investment Initiative." G8 Summit Declaration on Growth and Responsibility in Africa, Heiligendamm, June 2007 14
Political support for the Initiative is strong The G8 will continue to advance a number of initiatives to improve the investment climate and strengthening financial markets in Africa, such as the. Progress Report by the G8 Africa Personal Representatives (APRs) on implementation of the Africa Action Plan, Hokkaido Toyako, July 2008 "In the next 5 years the TICAD process will specifically focus on promotion of good governance, including strengthening economic governance through the NEPAD-OECD Africa Investment Initiative. TICAD IV Yokohama Action Plan, Yokohama, May 2008 15
3. ACTIVITIES & WORK METHODS Result-oriented and process driven, using and adapting multilaterallybacked policy assessment and capacity-building tools 16
The Initiative supports the efforts of NEPAD governments to enhance their investment climates by: Strengthening country capacity for designing, implementing and monitoring investment policy reforms Creating a network of dialogue between investment policy makers from NEPAD and OECD countries Creating a favourable environment for employment creation through investment climate improvements Assisting ministries and government agencies in coordinating their work Reinforcing the impact of development initiatives supported by international, regional and bilateral donors 17
The Initiative follows a comprehensive approach to driving feasible reforms (A) Assessing this Obstacles to investment Administrative practicability A Political support helps stimulate this Building capacity here helps stimulate this Source: Adapted from Lax and Sebenius 18
using and adapting policy assessment and capacity building tools Obstacles to Obstacles to investment investment Administrative practicability A Political support Source: Adapted from Lax and Sebenius 19
such as the Policy Framework for Investment PFI is a tool to support African governments in: Coherently identifying the bottlenecks to investment Formulating the right policies and governance structures to address the obstacles Enabling effective implementation and monitoring of policy reforms Key features of the PFI: Non-prescriptive Focus on policy governance Domestic and international investment Comprehensive, covering all policies that are important for investment Download the PFI at: www.oecd.org/daf/investment/pfi 20
Recent achievements Brazzaville roundtable (Dec. 2006): Main outcomes A dialogue was initiated between the APRM Secretariat, other NEPAD actors and reform-oriented countries wishing a more robust investment dimension in the APRM African countries have begun to use the PFI for self-evaluation Lusaka roundtable (Nov. 2007): Main outcomes Country experiences were given on challenges relating to the investment climate content of Africa s own peer review process (APRM). The decision was taken to review the APRM country self-assessment questionnaire. The PFI User s Toolkit was discussed based on its application in Zambia and on its role in supporting investment climate reform The investment environment conditions conducive to attracting sustainable investment in water and sanitation were analysed in light of new trends in private involvement in the sector. 21
Next steps Next roundtable (Uganda, 10-11 Dec. 2008): Main focus Making the most of best practices that will help NEPAD countries implement investment policy reforms, using innovative policy papers and country-specific experiences as a springboard for comprehensive, multi-stakeholder dialogue. Engaging the business sector as an agent for development Taking advantage of Africa s own peer review process (APRM) and of multilaterally-backed policy tools such as the Policy Framework for Investment (PFI). Sharing best practices to identify the business environment conditions conducive to attracting investment in Africa s road transport infrastructure. Investigating regional initiatives for improving transport infrastructure in the East African context 22
Next steps Renewal of the Initiative for 2009-2011: The first phase of the Initiative has focused on region-wide dialogue on investment policy. The second phase will focus on implementation. It will prioritize: Consolidating the regional dialogue on investment policies, including on reforms aimed at facilitating regional infrastructure projects and on strengthening the APRM s investment dimension; Engaging the private sector and reinforcing the dialogue with African governments on issues such as corporate responsibility; and Supporting pilot countries that are willing to review/reform their investment framework, by: evaluating the current investment climate based on the PFI, providing technical support, and facilitating peer-sharing of national experiences. 23
4. EXPECTED IMPACT An increase in beneficial private investment in African countries and closer regional economic integration 24
Expected impacts of the Initiative Better-informed decision-making Policy coherence within the Government on investment climate issues More effective policies for development-geared, propoor investment Strengthened capacity in African countries to reform and implement policies which create a level playing field for all investors Better perceptions and reality of African countries as locations to invest Improved competitiveness, attracting more FDI and domestic investment Closer integration into the global economy 25
5. GOVERNANCE The Initiative is governed by a Steering Group and is entirely funded through voluntary contributions 26
A Steering Group manages the Initiative Roles: To provide strategic direction, oversee the work programme, mobilise political and financial support and assist in the dissemination of outputs of the Initiative Chair: Chief Executive, NEPAD Secretariat. Vice Chairs from a NEPAD and an OECD country Other members: Senior investment experts from NEPAD countries, OECD countries, AU Commission, the Regional Economic Communities, multilateral development banks, UNCTAD, the OECD s Network on Poverty Reduction (POVNET) and Development Centre, the Africa Partnership Forum (APF), the Investment Climate Facility for Africa (ICF), the donor community, and the private sector 27
Financing the Initiative The Initiative is entirely funded through voluntary contributions Japan, Belgium and Germany have so far provided financial support to the Initiative Support for the programme is building, but more is needed 28
Contact information Visit: www.oecd.org/daf/investment/africa From the NEPAD secretariat: Mr. Victor Mathale, Advisor: Private Sector Initiatives e-mail victorm@nepad.org Tel: +27 (11) 313 3384; Fax +27 (11) 313 3583 From the OECD secretariat: Mr. Karim Dahou, Executive Programme Manager, e-mail: Karim.Dahou@oecd.org Tel: +33 145241938; Fax +33 144306135 Mr. Toru Homma, Project Manager, e-mail: Toru.Homma@oecd.org Tel: +33 145248448; Fax +33 144306135 THANK YOU 29