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PRESS RELEASE GOOD GOVERNANCE ESSENTIAL FOR FOREIGN DIRECT INVESTMENT
Posted Tue, 25 Oct 2005
The first major continent-wide study to measure and monitor “Progress towards good governance in Africa” undertaken by the United Nations, says bluntly that much more has to be achieved before we can say that the capable state is the norm in Africa.
Stanley Subramoney, Chief Executive of PriceWaterhouseCoopers, says, “The continent receives a mere 1% of global investments. That is too low to facilitate sustainable development and growth. The result is that there are many countries in Africa that continue to live on hand-outs and foreign aid.”
This economic reality is particularly saddening since Africa is a treasure trove of natural resources. But the problem is that Africa exports raw materials and imports the finished product. As a result, Africa gets poorer and the nations north of us get richer.
There are several obstacles that stand in the way of foreign investment in the continent. The first is afro-pessimism – the belief that the entire continent is corrupt and riddled with inefficiencies. “This is incorrect,” says Subramoney. There are countries that have maintained an admirable record of good government and good governance. What is really encouraging is the new thinking around governance largely influenced by peer review mechanisms engineered by the African Union.” Subramoney believes that the peer review mechanism can play a major role in regulating country behaviour.
Continental and regional bodies need to create a stable, investor-friendly environment. There are many similarities between strategies for running successful businesses and successful countries. Therefore, strategies to attract investment into a company through good governance and subsequent growth can be applied to the process of building a country geared towards attracting investment.
The second factor that can improve Africa’s position in the global arena is economic governance, which includes the independence of the Treasury and the Reserve Bank. The third is improved corporate governance. “Those three components of governance set the framework required to attract foreign investment but, if domestic business does not believe in investing in its own country, it becomes difficult for foreign investment to flow in,” cautions Subramoney.
Subramoney is one of the high-profile speakers at the third annual Eskom African Leaders Business Forum which will take place at the Sandton Convention Centre from 1-2 November 2005.
The highlights of the 2005 Forum, sponsored by Eskom, MTN, the National Ports Authority, Siemens and FirstRand, titled Leadership for Tranformation will include: four plenary sessions on women, poverty, entrepreneurship and governance; 32 high-level keynote speakers; three breakaway sessions on gender issues, entrepreneurship and practical leadership; twenty-four interactive learning sessions; 400 high-profile delegates expected from at least 25 African countries; two days of high-level business networking; and Pan-African media coverage and broadcast of selected sessions.
For further information, or should you wish to register on line, kindly visit the website www.businessinafrica.net or contact:
Portia Mofikoe, Business Development Manager
For further information contact: