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UN Generally Optimistic About Foreign Investments in Africa


The United Nations' World Investment Report paints a positive picture of Africa's investment potential, despite some disappointing performances in the past.

The U.N. report names Chad as Africa's star performer in attracting foreign direct investment last year. In 2002, foreign investors pumped more than $900 million into Chad, mainly because of proven oil reserves in the Doba basins of Lake Chad. The previous year, the central African country received no foreign investment whatsoever.

Overall, foreign direct investment into Africa plummeted from $19 billion in 2001 to $11 billion in 2002, a drop of about 41 percent that, according to the report, reflects world trends.

But the report notes foreign investment increased in 30 out of 53 African countries.

The chief executive officer for the Nairobi-based Institute for Economic Affairs, Dennis Kabaara, says there is a lot of cause for optimism about Africa's investment potential.

"The report actually is quite positive about Africa's future because it says really there are three areas in which FDI [foreign direct investment] will grow," he explained. "One is in the natural resource sectors, so you have countries like Angola, Chad, Equatorial Guinea, Nigeria, Sao Tome and Principe. Second is counties that actually have a serious privatization program. Only three are identified in the report: South Africa, Nigeria, Morocco. And third, those counties which are benefiting from trade initiatives, either the AGOA [African Growth and Opportunity Act] initiative or the Everything But Arms, the EU initiative. And in that category you have countries like Botswana, Kenya, Lesotho, Mozambique, Namibia, South Africa, and Uganda."

The top African countries in receiving direct foreign investment last year were Angola, Nigeria, Algeria, Chad, and Tunisia.

But there were also some losers. Zimbabwe, Ethiopia and Kenya were included in the report's list of under-performers, countries that exhibit low potential and perform poorly in the category of foreign direct investment.

At the Institute for Economic Affairs, Mr. Kabaara says such factors as little or no privatization, few natural resources and inefficient infrastructure contribute to low foreign investment.

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