African countries seem determined to attract investments from Gulf Cooperation Council (GCC) countries. African officials made their presence felt in two conferences in Qatar and Bahrain last week.
In particular, the African attention focuses on making the continent a natural choice for sovereign wealth funds (SWFs) from GCC states. The SWFs of the six-nation GCC amount to $1.5 trillion, of which $875 billion belongs to the UAE alone. The GCC states managed to amass the exceptional financial resources on the back of firm oil prices.
Several African leaders attended the UN-sponsored "Follow-up International Conference on Financing for Development to Review the Implementation of the Monterrey Consensus" that ended in Doha on December 2. The conference meant to address development in poor countries through trade, aid and debt relief.
Except for French President Nicolas Sarkozy, most Western leaders stayed away from the Doha meeting, ostensibly to avoid making specific commitments. The Western countries face the challenging job of overcoming the adverse effects of the global financial crisis. It is fair to assert that the conference has all but achieved its true aim of helping bridge the gap between rich and poor nations. African leaders tried but could not secure financial commitments from wealthy countries.
In addition, officials and business leaders from Africa actively took part at the "Strengthening GCC-Africa Co-operation in the Gulf" arranged by Crans Montana Forum Middle East in Manama. Several countries sent ministers of tourism to the gathering, ostensibly to attract visitors from the GCC to explore Africa's tourism potentials. Still, others sent top officials from food, industry and energy sectors hoping to attract GCC investments in specific sectors.
To be sure, statistics suggest that African countries are becoming increasingly popular destinations for foreign direct investments (FDI). According to the World Investment Report 2008, issued by the UN Conference on Trade and Development (UNCTAD), African countries attracted some $53 billion (Dh194.93 billion) worth of FDI in 2007 versus $46 billion in 2006 and $30 billion in 2005. Although the amount does not carry much weight per se, it suggests a positive trend of FDI inflows, in turn focusing on developing farm, fisheries and tourism industries.
Nevertheless, African nations have the daunting task of overcoming chronic problems hindering business prospects, notably corruption. Transparency International rates African states as the most corrupt countries in the world. Somalia ranks the worst nation on the 2008 Corruption Perceptions Index (CPI). The Democratic Republic of Congo, Equatorial Guinea besides Guinea, Chad and the Sudan are grouped amongst 10 worst performers. Yet, occupying the 36th position on the CPI, Botswana secured the best result for Africa amongst 180 nations reviewed for the annual survey.
CPI rating depends on results of 13 surveys. Reviewed economies earn points based on perceptions expressed by business and academic professionals concerning ways of doing business in various countries.
African authorities need to make the continent a safe place for business, though prospects remain dim. Only last week, some 400 people lost their lives in Nigeria in clashes involving Muslims and Christians disputing results of a local election.
Africa has the opportunity of enticing SWFs from the GCC, but the countries must do their homework.
- The writer is a Member of Parliament in Bahrain