Foreign Direct Investment inflows to East Africa fell by 14 per cent in 2018, according to the UN Conference on Trade and Development (UNCTAD).
This is despite FDI flows to Africa bucking the global trend and registering an increase of six per cent in 2018, though most of these inflows went to North and Southern Africa.
Paul Wessendorp, chief of UNCTAD’s Investment Promotion Section, added that global FDI inflows fell by 19 per cent in 2018 to an estimated $1.2 trillion, from $1.47 trillion in 2017.
“This is the third consecutive drop bringing FDI flows back to the low point after the global financial crisis,” said Mr Wessen-dorp.
Noting that FDI is the largest source of external finance for developing nations, Mr Wessendorp said that FDI has the potential to create higher-skilled employment, facilitate the diffusion of technology, and improve access to international markets.
He was speaking during the opening session of the three-day Regional Seminar on Facilitating Investment in Sustainable Development Goals Projects in Arusha, Tanzania.
He said that the resource implications for implementing SDGs, which were on top of the agenda for the UN, the wider international development community and UN Member States, was substantial.
“According to UNCTAD estimates, developing countries alone face an annual investment gap of $2.5 trillion required to achieve the SDGs,” said the UNCTAD official, adding that private sector investment, including FDI, should be mobilised for SDG-related projects in areas such as the creation of decent work, power generation, infrastructure, and water and sanitation in addition to food security, climate change mitigation, and adaptation, health and education.
EAC secretary-general Liberat Mfumukeko, in remarks read on his behalf by Charles Omusana, the Private Sector Development and Investment Promotion Officer at the EAC Secretariat, said the EAC had structured its programmes in a way that addresses all the 17 SDGs.
The secretary-general disclosed that the region still has patent challenges that negatively affect its investment climate, namely: Non-tariff barriers; availability of affordable finance, power and other utilities; appropriate quality infrastructure; a domestic private sector that still needs a lot of hand-holding, and unpredictable investment regimes.
Amb. Mfumukeko urged Investment Promotion Agencies to take the lead and advocate for a better and conducive climate for investment to thrive in the region.
Geoffrey Mwambe, the executive director of the Tanzania Investment Centre hailed UNCTAD for supporting the development and implementation of the e-Regulations project as a means to enhance pro-investment services in Tanzania.
The workshop has drawn participants and IPAs from all the six EAC Partner States.