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Germany and Others Canvass

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by Godson Ikoro

This Day
November 8, 2001

The clamour of developing nations, particularly African countries, for more foreign direct investment and development aid from industrialised nations and the World Bank has got a renewed global support. At the ongoing sixth International Business Forum on Investment, Environment and Corporate Social Responsibility organised by the Carl Duisberg Gessellschaft ev (CDG) in Berlin Germany, participants called on industrialised nations to extend more investment to African countries following their improving investment climate just as the World Bank was urged to adjust its aid to these nations to fit the tenets of globalisation.


Speaking for the German Government at the conference which ended yesterday, the parliamentary state secretary in the Federal Ministry of Economic Cooperation and Development (BMZ), Dr Uschi Eid called on industrialised nations to invest in African countries. She said that contrary to the usual hesitance of entrepreneurs from developed nation to invest in African countries because of what she described as the wrong notion that it was not business friendly, many developing countries were already taking the necessary steps to make themselves competitive investment locations. Specifically, she cited political reforms, return of democracy, respect of human rights and the rule of law as well as economic and fiscal policies measures taken by these countries as positive signals, which the enterpreneurs from industrialised nations should take advantage of.

To buttress her point, she cited the example of African countries led by Nigeria under the "Global Coalition on Africa" and reform efforts at improving the judicial and economic environment for the private sector. "I have just come back from a meeting of the global coalition on Africa where discussions centred around the issue of improving the political, judicial and economic environment for the private sector," she said. Eid also lauded the efforts of President Olusegun Obasanjo and the presidents of South Africa, Egypt, Senegal and Algeria under NEPAD, a joint initiative and strategy paper aimed at creating investment friendly climate to galvanise corporate commitment.

Although she did not totally debunk the reservations held against foreign direct investments in these countries like child labour, environmental disasters and exploitation of cheap labour, Eid called on transnational corporations to comply with views on sustainable development agreed upon as a guiding principle at the conference on environment and development in Rio de Janeiro in 1992. Consequently, she called on the industrialised nations to explore means to ensuring that developing countries become an attractive location for foreign investors under a general environment that has become more difficult.

Also, speaking at the Conference on "Providing Public Goods Through Private Actors," Professor Konrad Von Moltke, Dartmouth College, Norwich USA said that the emergence of private actors and foreign direct investment has changed the conditions for Official Development Assistance (ODA) which the World Bank must adjust to in extending development aid to African countries.

Specifically, he said that the current international debate on poverty alleviation is the latest in the series of attempts to create a new justification for ODA. According to him, the World Bank has been the focus of these changes because it had the resources to sustain them and because it carries a large burden of debts from developing countries. He argued that as these debts are repaid, World Bank faces pressure to recycle them back to debtor countries so as to avoid a situation where there is a net flow of funds to World Bank. He noted that while there is need to justify the loans, the advent of globalisation has demonstrated that private investors are taking on projects that show satisfactory rate of return.

Konrad argued that since the processes of globalisation appear irreversible, the ODA represented by World Bank should adjust to the changing environment. According to him, among the options available are structural adjustment lending, public/private partnerships and the promotion of global public goods, environment and sustainable development in particular. He stressed that the ODA should identify places where private investment is not reaching. He argued that given the desire to promote public goods through private investment, the World Bank has a potentially critical role in adjusting market incentives to accelerate the transition of African nations to greater sustainability.

Also calling for more aid to Africa, Grace Masiye Nkhoma of International Capital Corporation (Z) Limited, said the attraction of foreign aid, capital is a very important avenue of financial domestic investment requirements and overcoming the domestic scarcity of capital. She argued that given that FDI inflow is necessary to supplement the meagre domestic resources available for technological improvement needed to enhance Africa's output of exportables developed nations, African nations should take interest in promotional efforts to present a positive image to the eyes of the investors.


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FAIR USE NOTICE: This page contains copyrighted material the use of which has not been specifically authorized by the copyright owner. Global Policy Forum distributes this material without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes. We believe this constitutes a fair use of any such copyrighted material as provided for in 17 U.S.C § 107. If you wish to use copyrighted material from this site for purposes of your own that go beyond fair use, you must obtain permission from the copyright owner.