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FDI: Source of Sustainable Growth Africa Foreign Investors Survey 2005 2007 Africa Day Symposium Yoshiteru Uramoto Deput

FDI: Source of Sustainable Growth Africa Foreign Investors Survey 2005 2007 Africa Day Symposium Yoshiteru Uramoto Deputy to the Director General United Nations Industrial Development Organization Comparison with Macro level FDI statistics

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FDI: Source of Sustainable Growth Africa Foreign Investors Survey 2005 2007 Africa Day Symposium Yoshiteru Uramoto Deput

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  1. FDI: Source of Sustainable Growth Africa Foreign Investors Survey 2005 2007 Africa Day Symposium Yoshiteru Uramoto Deputy to the Director General United Nations Industrial Development Organization

  2. Comparison with Macro level FDI statistics • Survey results suggest that inward investment flows measured by the balance of payments (BoP) of UNCTAD and IMF may understate the actual level of FDI in Africa • The number of foreign affiliates identified by survey was in some cases larger than the population of subsidiaries of TNCs recorded in BoP statistics. • Enterprise level surveys capture smaller units • Some types of investment e.g. re-invested earnings only measurable in surveys

  3. UNIDO African Foreign Investor Surveys • UNIDO has been working with African IPAs since 2000 to improve their capacity to stimulate growth through investment • The surveys measure: • Impact of investment climate on investor perceptions and actions • Impact of investor actions on domestic economy • The scope of the survey is expanding and will cover more than 30 countries

  4. Sample size and response rate • In total 1216 companies participated • The response rate was 35% (3484 companies received a questionnaire)

  5. Purpose of 2005 Survey • Measure investment according to investor groups • Measure Investment other than in extractive industries (especially in Africa) • Assess the relation between business environment and performance Data Analyses: PERFORMANCE IMPACT INVESTOR GROUP INVESTOR PERCEPTION • Local content • Employment growth • Training • Technology transfer • Importance and change of location factors • IPA assessment • Origin • Organizational structure • Market orientation • Sub-sectors • Share structure • Age • Growth • Productivity • Re-investment

  6. Growing presence of entrepreneurs and South investors

  7. Sales and employment structure Sales Employment

  8. Training expenditure per worker 9

  9. Sales performance for sub-sectors 10

  10. Local content Note: Only manufacturing firms

  11. Local expenditures on material and subcontracting (as % of sales) Note: Only manufacturing firms

  12. Home regions

  13. Three-year performance evaluation

  14. Inter-Africa investment • South African investors in sample: • Have the highest average investment levels of any source country • Are the most satisfied with the performance of their operations • Spend most per worker on training • Have highest sales growth expectations • Pay the highest wages • Other African investors: • High expenditure on training per worker • High labor productivity • High skill intensity

  15. Key outcomes of the 2005 Survey • Proportion of South-South FDI increasing over time; their perception, performance and decision making characteristics differ from North • Individual investors (FEs) are an important element of FDI in SSA and require new investment promotion strategy • They need and want more investment assistance • Regarded as growth sector by equity funds • Many have regional market orientation • Large differences between Francophone West Africa and Anglophone East Africa (structure, growth, age, etc. reflecting differing investment climate and response) • Dichotomy of jobless growth versus employment generation with limited value creation. • Northern L-TNCs - stagnant employment but high share of skilled labour force • South S-TNCs – labour-intensive industries with fast growth but no human capacity development and low wages

  16. Note: MTN Nigeria was not considered Future investment rate and volume Note: Over the next three years, normalized with 2004 total firm sales

  17. Expected future investment 18

  18. Past and future investment volumes for different sub-sectors Past 3 years Next 3 years 19

  19. Growth Employment Investment • Local supply chain • Training • Technology diffusion • Export • Output growth • Investor satisfaction • Productivity • Market conditions • Local resources • Operational and regulatory impediments Political will Policy Intervention Political will INVESTMENT CLIMATE PERFORMANCE IMPACT INVESTOR PERCEPTIONS Management of FDI-Local economy Priority issues to be addressed Investor support services Intermediary Agencies 20

  20. Investment Monitoring Platform Policy Strategy/services Measure policy impact Calibration Country (Gov. inst.) Transparency Company Benchmark Training Analysis Supplier Sub-contr. Data Survey data Civil society Companies Online tools Investment opportunities Trends Suppliers/buyers partners Support services Enterprise Diagnostic Data Country Data Other Data Sources Financial Institutions RECs & Development partners Growth areas Specific opportunities Technical assistance needs Indicators 21

  21. Direct support linking FDI/SME development 22

  22. Thank you. www.unido.org/afripanet Mr. Yoshiteru Uramoto Deputy to UNIDO Director General 23

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