African Governments and Investors Discuss Declining Foreign Direct Investment

Henry Rotich, Kenya's Finance Minister, with Patrice Talon, President of Benin, during the ATI meetings in Nairobi

African Governments and Investors Discuss Declining Foreign Direct Investment

By Abdi Ali
Published May 16, 2017

African Trade Insurance Agency Chief Executive Officer George Otieno with Benin's President Patrice Talon in Nairobi. Representatives of governments and investment have met in the Kenyan capital, Nairobi, to explore ways and means of closing a US$900 Billion infrastructure gap in the face of decreasing foreign direct investment (FDI) flow across Africa.

Government Ministers from across Africa have sat together with investors and the private sector to determine how best to tackle the investment and credit risk hurdles in order to make African risks bankable. The meeting has come at a time of geopolitical uncertainties which, according to The World Bank, could lead to ‘higher borrowing costs or cut off capital flows to emerging and frontier markets’.

The private sector stands to lose billions of dollars in lost opportunities if the requirements for a favourable investment environment are not adequately addressed.

The sustained commodity price decline and current geopolitical uncertainties took centre stage, with participants urging African governments to focus on growing intra-African trade and diversifying their economies away from commodity reliance in order to reduce vulnerability to external shocks.

Henry Rotich, Kenya's Finance Minister, with Patrice Talon, President of Benin, during the ATI meetings in Nairobi With sub-Saharan Africa’s GDP growth rates expected to hit a record low of 1.5%, depressed commodity rates are seen to be one of the major drivers with export producers accounting for two-thirds of the region’s growth.

The meeting, the 4th Roundtable to focus on Political and Credit Risks in Africa, took place on the sidelines of the 17th Annual General Meeting of African Trade Insurance Agency (ATI) that was founded in 2001 by African States to cover the trade and investment risks of companies doing business in Africa.

ATI AGM 2017 urges African governments to intently focus on growing intra-African trade and diversifying their economies away from commodity reliance in order to reduce vulnerability to external shocks. ATI says it provides Political Risk, Surety Bonds, Trade Credit Insurance, and Political Violence and Terrorism & Sabotage cover.

“Africa is in a period of realignment in this new global order but I don’t think anyone should bet against its resilience. We are still home to some of the fastest growing economies in the world – as of 2017, the World Economic Forum ranks Côte d’Ivoire, Tanzania and Senegal on the list of the top ten fastest growing economies in the world,” notes George Otieno, ATI’s CEO.

In such a scenario, African governments are advised to focus on economic diversity to maintain growth while addressing risks to investors.