Africa remains the least attractive destination for global capital-PS

Lilongwe, November 27, 2006, Mana: Principal Secretaryfor Industry Trade and Private Sector Development, Newby Kumwembe said Africa remains the least attractive destination for global capital investment. Kumwembe was speaking on Friday in Lilongwe at a Trade and Finance workshop organised by Africa Trade Insurance Agency (ATI).

He said that the perception of Africa as a risky place to do business fuelled by negative publicity in western media has been one of the greatest contributing factor to the low levels of Foreign Direct Investment (FDI) and erosion of competitiveness among operating businesses in Africa.

He observed that Africa remains the least attractive investment destination despite United Nations conference on Trade and Development (UNCTAD) rating Africa as potentially the most profitable investment destination in the world. “This is constraining Africa’s ability to maximise on its vast resources and potential” the PS said.

He, however, recognised the efforts of regional economic grouping like the Common Market for Eastern and Southern Africa (COMESA), Southern Africa Development Community (SADC), Economic Commission for West African States (ECOWAS) and others for fostering trade and investment conditions that are attractive to domestic and foreign investments and trade. Kumwembe said the efforts of these regional groupings need to be supported by instruments that directly address risk concerns of international capital like the African Trade Insurance Agency (ATI).

 In his remarks, Africa Trade Insurance agency (ATI) Underwriter Humphrey Mwangi said the agency was formed in 2001 by African states with the mandate of facilitating, encouraging and developing the provision of, or support for, insurance including co-insurance and reinsurance guarantees and other productive activities in Africa in supplement to those offered by the private sector.

Mwangi said ATI’s foreign Direct Investment Insurance or guarantee covers the investor or financer against the loss of equity in a project due to confiscation or broad political force. Member states of ATI include Malawi, Burundi, the Democratic Republic of Congo, Djibouti; Eritrea, Kenya, Liberia, Madagascar; Rwanda, Tanzania, Uganda and Zambia.