South African Minister recommends Shift of African investment towards industry
25 September 2012
United Nations Conference on Trade and Development (UNCTAD): Africa has a bright future for attracting investment, but must use the opportunity to boost industry and improve infrastructure, H.E. Mr. Rob Davies, Minister of Trade and Industry of South Africa told the UNCTAD Trade and Development Board today during the Board's discussions under its agenda item on "Investment for Development."
Minister Davies said a “profound shift” occurring in the global economy with the growing centrality of developing countries in driving global economic growth, appears also to promise growing foreign direct investment in Africa.
“These global changes have been accompanied by significant improvements in Africa’s economic prospects,” Minister Davies said. “Africa is already the second fastest growing continent in the world, after Asia, and offers the highest return on investment of any region.”
The challenge, Minister Davies stressed, “is to move off an economic growth path built on consumption and commodity exports onto a more sustainable developmental path based on industrialization.” He said such an approach should include improvements in infrastructure so that African countries can successfully host new and more sophisticated forms of industry. It also should include increased regional and intra-African economic cooperation and trade.
Foreign direct investment (FDI) should be considered by African countries based on an “investment for sustainable development model (ISD)” instead through a “freedom of investment model,” he recommended. The freedom of investment approach, which has prevailed in recent years, “tends to assume that all investment is good, and that all investment promotes development. . . By contrast, the ISD approach recognizes that while FDI can make a positive contribution to sustainable development, the benefits to host countries are not automatic.”