Driving Foreign Direct Investment (FDI) to Africa

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Driving Foreign Direct Investment (FDI) to Africa

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Use the following timestamps to navigate different sections of the video.

00:00 Welcome and opening remarks
09:00 Current state of FDI in Africa
11:52 Countries and sectors where FDI levels have remained steady
14:02 FDI flows to vulnerable countries affected by fragility and conflict
15:21 Outlook for FDI for the African continent
19:14 The role of MIGA in Africa
25:57 Stories from the frontlines: the impact of FDI in Africa
30:13 How COVID-19 affected FDI flows to Senegal
33:09 Perspective of the private sector and investors in supporting development projects
37:29 What countries need to do to further drive investor interest
40:58 MIGA's role in driving Foreign Direct Investment (FDI) to Africa
42:39 What Senegal is doing to keep FDI flowing to the country
46:44 Prognosis of FDI trends in Africa going forward
49:45 Opportunities for investments between countries on Africa
53:10 Investing in climate related projects in Africa
56:09 Policies that governments can adapt to catalyze FDI in Africa
59:19 Live Q&A: free trade agreements, competitiveness, entrepreneurs
1:04:53 Closing remarks

 

Speakers

Moderator

Read the transcript


  • 00:07 (music)
  • 00:22 [Esther Awoniyi]: Welcome to everyone wherever you're joining
  • 00:24 us from across the world. Thank you for tuning into this live event hosted by the World Bank's
  • 00:30 Multilateral Investment Guarantee Agency, MIGA. I'm Esther Awoniyi, Business Anchor
  • 00:36 at CNBC, Africa, and your MC and moderator for today. Thank you for joining
  • 00:41 us. Today we'll be unpacking the theme, Driving Foreign Direct Investment to Africa, the first
  • 00:47 in an annual series. In the next 60 minutes, we'll showcase investment opportunities in
  • 00:52 Africa and share new thinking and discussions on FDI among a cross-section of experts, including
  • 00:58 investors, policy makers, and economists.
  • 01:00 [Esther Awoniyi]: We'd love for you, our online viewers, to
  • 01:03 be a part of today's conversation, so please go ahead and post your questions, reactions,
  • 01:08 and engage with the panelists and speakers from the platform you're watching this event
  • 01:13 from. Please also share with the event hashtag #FDIAfrica. Once again, I welcome you all.
  • 01:20 Now to help us kick things off, please welcome Mr. Hiroshi Matano, Executive Vice President,
  • 01:26 MIGA, with some opening remarks. Over to you, Hiroshi.
  • 01:31 [Hiroshi Matano]: Thank you, Esther. I'm pleased to be kicking
  • 01:35 off
  • 01:36 what I hope will be the first of an annual event series on FDI.
  • 01:42 While we always look to innovate and introduce new product lines,
  • 01:45 such as credit enhancement and support for trade finance,
  • 01:48 FDI lies at the heart of what we do. We're the agency within the World Bank Group
  • 01:55 mandated explicitly with bringing in FDI to developing countries.
  • 02:00 Indeed, we were also charged in fiscal year '21
  • 02:06 by issuing US$5.2 billion in insurance coverage for projects across the world.
  • 02:12 [Hiroshi Matano]: However, this event is intended to be a discussion
  • 02:16 and spur a conversation, not just showcasing the work we're doing. This is why we have
  • 02:22 asked James Zhan of UNCTAD, who is Chief Editor of the World Investment Report, to set the
  • 02:29 big picture stage for us. In the spirit of conversation and problem solving, we have
  • 02:35 also asked experts and practitioners, including Honorable Minister, Amadou Hott, who works
  • 02:42 every day on the challenge of bringing FDI to Africa, to share their thoughts on what
  • 02:48 the challenge and opportunities are.
  • 02:51 [Hiroshi Matano]: We focus in Africa this year because it had
  • 02:54 been hit particularly severely as a result of COVID. FDI flow to Sub-Sahara Africa decreases
  • 03:03 in 2020 by 12% to $30 billion. And Greenfield project announcements, key to industrialization
  • 03:12 process in the region, dropped by a 62% to $29 billion, while international project finance
  • 03:21 plummeted by 74% to $32 billion. These are big challenges and how they can be addressed
  • 03:30 will be discussed further over the coming hour. I look forward to an enriching conversation.
  • 03:35 Before closing, let me add in, that in addition to this public annual event, MIGA also aims
  • 03:43 to host FDI dialogues in several African countries over the next few months, to ensure that this
  • 03:50 conversation goes forth. Assuming safe travel goes practical, MIGA management and staff
  • 03:57 look forward to meeting with investors and policy makers to further discuss the pressing
  • 04:03 issues. With that, let me invite President Malpass to say a few words.
  • 04:09 [David R. Malpass]: I'm very pleased to welcome you all today
  • 04:15 to discuss a topic that is a critical part of driving sustainable economic recovery in
  • 04:21 Africa. That is mobilizing private investments and FDI into the region. MIGA was established
  • 04:28 33 years ago because the World Bank governors at the time realized that concerted action
  • 04:35 was needed to increase capital flows to developing countries, without unduly increasing their
  • 04:40 indebtedness. They built a foundational organization, MIGA, whose purpose is to drive FDI into developing
  • 04:49 countries, through investment guarantees. Though that was a different era, we find ourselves
  • 04:54 faced with new compounding challenges. Reversals in development, rising debt, a fragile global
  • 05:01 economy, and the climate crisis. These challenging times however, also offer us a profound opportunity.
  • 05:10 For Africa, FDI can help drive economic recovery, create jobs, generate taxes, open up participation
  • 05:18 in global value chains and be a conduit for knowledge sharing. It has a great potential
  • 05:26 to bring much needed investments in climate, infrastructure, and resiliency to Africa.
  • 05:32 [David R. Malpass]: The COVID pandemic has had a big impact on
  • 05:35 FDI. Flows into emerging markets fell 8% in 2020, and 16% to Africa. However, signs that
  • 05:44 the continent will rebound as a destination for FDI are emerging, and foreign investors
  • 05:50 are seeing green opportunities as well. Renewable energy investments into Africa actually rose
  • 05:57 by 28% in 2020. Globally, the rise in sustainability-focused investments has been rapid. In 2020, the value
  • 06:08 of sustainably themed investment products was $3.2 trillion, up more than 80% from 2019.
  • 06:16 However, the vast majority of this is directed to developed markets and it's our collective
  • 06:23 responsibility to channel more of this funding to developing countries, and Africa in particular.
  • 06:30 Looking ahead, there are concrete actions that can be taken to best leverage FDI going
  • 06:36 forward, that I'd like to put on the table. First, it's important to protect existing
  • 06:41 FDI flows and preserve supply chains that connect foreign and domestic suppliers. Policy
  • 06:47 makers need to review investment policy and promotion strategies to test which ones have
  • 06:53 proven resilient and can support the early stages of the recovery.
  • 06:58 [David R. Malpass]: Second, policy makers need to aim for returning
  • 07:03 to pre-pandemic levels of FDI by focusing on the emerging competitive sectors. Analysis
  • 07:09 of sector dynamics and investor consultations are key to confirm investment competitiveness
  • 07:16 of these sectors. This will enable more targeted investor outreach, and promotion of strategies
  • 07:23 that can position countries as investment destinations. And third, investment policy
  • 07:30 reform should improve the value propositions in these identified priority sectors. Countries
  • 07:36 should focus not only on attracting more FDI, but strengthening its impact so that it is
  • 07:43 development oriented, and facilitates reallocation of resources toward long run economic transformation,
  • 07:52 job creation, and inclusion. This will depend heavily on enabling the business environment.
  • 08:01 Solid actions can lay the groundwork for improving overall business climate and investment conditions
  • 08:08 to attract sustainable FDI.
  • 08:10 [David R. Malpass]: The World Bank Group stands ready to work
  • 08:14 with our clients on these critical issues. Our MIGA arm is well equipped to work with
  • 08:19 private investors who want to be part of this sustainable recovery. I hope these discussions
  • 08:25 will help untangle some of the challenges in driving FDI to developing countries, and
  • 08:31 specifically to Africa. I hope we can collectively chart a concrete path of channeling investment
  • 08:39 into the most impactful projects that deliver returns on human capital, broad based growth,
  • 08:46 and sustainability. Wishing you all a very fruitful discussion. Thanks.
  • 08:55 [Esther Awoniyi]: [inaudible 00:09:33] the significant drop
  • 09:06 in FDI to Africa since 2020. FDI inflows remain the continent's key to sustainable growth.
  • 09:14 Well, joining me now to give us a better picture of the state of, and trends in FDI flows in
  • 09:20 developing countries and an outlook for the African continent is Mr. James Zhan, Senior
  • 09:25 Director of Investment and Enterprise at the United Nations Conference on Trade and Development,
  • 09:31 UNCTAD. Well, thank you so much, James, for taking the time out to join us today. Let's
  • 09:35 just dive right in. What is the current state of FDI in Africa?
  • 09:40 [James Zhan]: Thank you, Esther. I think for the current
  • 09:44 state, I would say that FDI in Africa was hit hard but more resilient, with a quick
  • 09:52 rebound. FDI in Africa was hit hard by the triple shocks caused by the pandemic supply,
  • 09:58 demand and policy. But the decline in influence was much less than the world average. In 2020,
  • 10:07 FDI to Africa declined by 16% to $40 billion. Most countries and regions within the continent
  • 10:15 was affected. FDI inflows to North Africa contracted by 25% to $10 billion, with major
  • 10:24 declines in most countries, such as Egypt, Nigeria, Sudan, and Tunisia. FDI inflows to
  • 10:32 Sub-Saharan Africa decreased by 12% to $30 billion, with large declines in Ghana and
  • 10:41 South Africa.
  • 10:42 [James Zhan]: But nevertheless, FDI flows to Africa demonstrated
  • 10:46 more resilient, compared with the rest of the world. Global FDI declined by 35% last
  • 10:53 year with much more decline in developed economies, transition economies and the Latin America.
  • 11:00 But for the current state I'm talking about, the first half of this year, FDI flows to
  • 11:07 Africa rebounded with 16% increase, reaching an estimated $23 billion. For Sub-Saharan
  • 11:15 Africa, we saw 22% rise with FDI reaching an estimated $18 billion, and the flows rose
  • 11:23 strongly in Nigeria, Mozambique, Ethiopia, and South Africa. FDI remained flat in north
  • 11:31 of Africa while flows to Egypt registered a very minor decline. They rose in Morocco
  • 11:39 and Tunisia. So please note that the relatively positive picture mask the divergence in sectors,
  • 11:46 types of investment, and the geographical distribution.
  • 11:48 [Esther Awoniyi]: Well, positive indeed. But are there countries
  • 11:52 and sectors where FDI levels have remained steady or which haven't been as affected by
  • 11:58 the pandemic, and why so?
  • 12:00 [James Zhan]: Yes, Esther. In some countries, FDI flows
  • 12:04 remained steady or increased slightly. In 2020, for example, flows to Morocco remained
  • 12:11 stable at $1.8 trillion. Morocco's FDI profile was relatively diversified with an established
  • 12:20 presence of some major multinational companies in manufacturing sectors, including automotive,
  • 12:26 aerospace, and the tech cells. Inflows to Nigeria increased slightly to $2.4 billion,
  • 12:35 and to Senegal, FDI was higher. In fact, it increased by 39% in 2020. Central Africa as
  • 12:48 a sub region registered an increase of FDI with inflows of $9.2 billion, and this increasing
  • 12:55 inflows, in particular, in the Republic of Congo. Sector wise-
  • 12:58 [Esther Awoniyi]: Okay. But what do you observe in... Oh, go
  • 12:59 ahead. Sorry to interrupt you. Go ahead.
  • 13:00 [James Zhan]: ... sector wise, the natural resources sector
  • 13:02 will hit hard in 2020, but I had a rapid recovery in the first half of this year. The new investment
  • 13:11 growth sectors was disrupted in 2020, but growing including logistics, financial services,
  • 13:19 consumer services, and renewable energies. What is worrisome is the SDG, Sustainable
  • 13:25 Development Goal sectors, are so seriously impacted, and it will take longer time to
  • 13:30 recover. This includes transportation, water and sanitary, food and agriculture, health
  • 13:38 and education. So the immediate challenge is to minimize the number of lost years in
  • 13:46 terms of progress made towards SDG goals. The main concern in Africa is that the pandemic
  • 13:54 could wipe out the development gains achieved over the last decade.
  • 13:59 [Esther Awoniyi]: Hopefully that won't be the case. But what
  • 14:02 do you observe in terms of FDI flows to more vulnerable countries? Are those affected by
  • 14:07 fragility and conflict?
  • 14:08 [James Zhan]: Yeah. For these vulnerable economies and low
  • 14:11 incomes, I would say it's not worth it that FDI inflows to the 33 African least developed
  • 14:18 countries, increased by 7% to $14 billion in the mid of the pandemic. As a result of
  • 14:26 that, African LDCs perform the better than Africa as a whole. As I mentioned that, FDI
  • 14:33 flows in Africa as whole declined by 16%. The inflows exceeds the 1 billion in five
  • 14:40 African least developed countries. And the 500 meeting in another five. Ethiopia remained
  • 14:47 the largest African low income countries recipient for FDI. In Mozambique, inflows grew by 6%.
  • 14:56 And the Democratic Republic of Congo, investment increased by 11%. In Tanzania, investment
  • 15:04 flows grow by 2%. Uganda failed by 35%. In Sudan, this decreased by 13%. So that's roughly
  • 15:15 the picture of vulnerable and low economy [inaudible 00:16:01].
  • 15:20 [Esther Awoniyi]: What is your outlook for FDI for the continent?
  • 15:24 Obviously, we are hoping that the numbers do pick up going forward. We know that there's
  • 15:30 still issues of debt. There are many African countries. The looming debt crisis were told
  • 15:36 on the continent. Of course, multilateral agencies are trying to aid African countries
  • 15:43 to ensure that they're not buried on all that debt. But what is your outlook for FDI for
  • 15:47 the continent?
  • 15:48 [James Zhan]: Yep. As the short-term and longer term. The
  • 15:52 short-term prospects, I would see a rapid rebounce, but the full recovery takes a longer
  • 15:58 time with uncertainty. So FDI in Africa, expected to increase in 2021. That's what we are witnessing.
  • 16:08 But a full FDI recovery will take place towards perhaps the second half of 2022. Amid slow
  • 16:17 rollout of vaccines and emergence of the new COVID strains such as Delta and the Omicron,
  • 16:24 a significant downside risk persist for FDI in Africa and the prospects for an immediate
  • 16:32 full recovery uncertain. Specifically, we see that similar to the global level growing
  • 16:41 investor, confidence in Africa is mostly in infrastructure, both by favorable long-term
  • 16:48 financing conditions, recovery, stimulus packages, and development assistance related investment
  • 16:54 programs, and international project finance deals. In fact, it was up significantly in
  • 17:02 value. And we also see that it's large deals in some power sectors.
  • 17:07 [James Zhan]: Now, in contrast, investors' confidence in
  • 17:11 Africa, in industry and global value chain remains uncertain. Greenfield Investment Projects
  • 17:18 announcement continued their downward path. That's about 30% in value and 25% in number
  • 17:28 of Greenfield projects for the first three quarters of this year. So that's the kind
  • 17:33 of indicator for the immediate future of FDI flows to Africa. The recovery of investment
  • 17:39 flows to Sustainable Development Goal related sectors in Africa, which have suffered significantly
  • 17:46 during the pandemic with almost a double digit, declines across all SDG sectors. And they
  • 17:54 will remain fragile.
  • 17:55 [James Zhan]: The combined number of announced Greenfield
  • 17:59 investment and projects, financed deals, fell by 32% in these SDG sectors. That's education
  • 18:07 and water, sanitary and what I mentioned earlier. Longer term prospects in Africa for FDI, I
  • 18:13 would say positive with great potential. So new opportunities due to global value chain
  • 18:20 restructuring, which is going to happen, intensified business related international assistance
  • 18:25 in Africa by major countries. The approval of the key mega projects, the Africans Continental
  • 18:33 Free Trade Area Agreement, and this forthcoming sustainable investment protocol, could lead
  • 18:39 to investment and picking up greater momentum beyond the 2022. So Africa is projected to
  • 18:47 grow by 4.6% in 2021, and average of 4% up to 2025. All this will attract investment
  • 19:00 in the years to come.
  • 19:01 [Esther Awoniyi]: Well, fingers crossed on that. Thank you so
  • 19:04 much Zhan, for talking to us today. Now we're moving quickly to our next segment [crosstalk
  • 19:08 00:19:52].
  • 19:09 [James Zhan]: Thank you to MIGA for inviting me.
  • 19:11 [Esther Awoniyi]: We're moving quickly to our next segment,
  • 19:14 where we go behind the scenes to get a good sense of the impact of FDI on the ground in
  • 19:19 African countries.
  • 19:22 [Nkemjika I. Onwuamaegbu]: Good morning. Good afternoon to everyone joining
  • 19:32 today. I would like to take you through a quick tour of MIGA in Africa, and the role
  • 19:36 we play in driving Foreign Direct Investment into the region. First, a quick overview of
  • 19:43 what MIGA does. MIGA's investment guarantees can support a variety of projects, ranging
  • 19:48 from pure private sector, all the way to public sector projects procured by governments. We
  • 19:54 offer political risk insurance products to protect against transfer restriction and currency
  • 19:59 inconvertibility, expropriation, war and civil disturbance, and breach of contract risks.
  • 20:05 We also offer a credit enhancement product that protects against defaults of loans to
  • 20:10 eligible host governments. MIGA has been supporting investments in Africa since its inception
  • 20:16 over 30 years ago. Currently, Africa is the region with the largest outstanding gross
  • 20:22 exposure, representing nearly 30% of our total portfolio exposure. That's six and a half
  • 20:29 billion dollars in guarantees across 99 projects in 30 member countries across Africa. MIGA's
  • 20:36 impact has been significant. 11 million Tons of CO2 equivalent avoided per year, 19,000
  • 20:44 Gigawatts of power generation and 40,000 people employed.
  • 20:49 [Nkemjika I. Onwuamaegbu]: Now travel with me across the continent and
  • 20:52 take a closer look at some of our projects, where MIGA has worked with investors to uncover
  • 20:57 the investment opportunity. Our first stop will be the Kasada Hospitality project. This
  • 21:03 project spans 10 countries across Africa. Kasada, a hospitality focused private equity
  • 21:10 fund, approached MIGA as it was considering building its portfolio of up to $1 billion,
  • 21:16 into the hospitality industry across Africa. MIGA is providing total coverage of up to
  • 21:22 $271 million to Kasada and its subsidiaries. The first set of projects to be covered, a
  • 21:29 portfolio of eight Brownfield hotels acquired by Kasada and operated by a core in Cameroon,
  • 21:36 Cote d'Ivoire and Senegal. A trend we've been witnessing is a gravitation towards Brownfield
  • 21:42 acquisitions versus Greenfield projects in the post-COVID recovery. Greenfield project
  • 21:48 announcements, which reflect investor sentiment and future FDI trends, dropped by 62% from
  • 21:55 $77 billion in 2019 to $29 billion in 2020. Greenfield investments are particularly difficult
  • 22:03 in the hospitality sector where existing capacity remains above demand.
  • 22:07 [Nkemjika I. Onwuamaegbu]: For MIGA, the Kasada project was a great opportunity
  • 22:11 to support a Brownfield investment that will preserve existing jobs and create new jobs,
  • 22:17 directly and indirectly right away. As part of its $1 billion portfolio, Kasada will pursue
  • 22:24 70% Brownfield acquisitions and 30% Greenfield developments. Kasada will prioritize projects
  • 22:31 that have started construction, but have not been completed due to a lack of capital or
  • 22:36 other economic pressures. Now let's move to Burkina Faso to discuss some solar projects
  • 22:43 MIGA's supporting. Burkina Faso has one of the lowest electrification rates in the Sub-Saharan
  • 22:49 African region. 20% as compared to 48% for the region overall. The country is striving
  • 22:55 to address its energy access challenges and enhance its energy security. To advance energy
  • 23:01 access in the country, MIGA recently issued over $5 million to French investor GreenYellow
  • 23:07 that will cover its investments into a 30 Megawatt solar PV energy facility in [Magrionga
  • 23:12 00:23:56].
  • 23:13 [Nkemjika I. Onwuamaegbu]: What makes this project unique? The planter
  • 23:16 anticipated to be part of the first round of solar IPPs in Burkina Faso, and will bring
  • 23:21 much needed, clean and affordable power to the country. Our next stops are in Central
  • 23:26 Africa, where MIGA has partnered with an innovative off-grid energy access company called Bboxx.
  • 23:32 Bboxx is a next generation utility that offers off-grid energy solutions, including solar
  • 23:39 home systems, alongside equipment like lights, televisions, and refrigerators. Bboxx is also
  • 23:45 using energy as an access point to other services such as LPG cylinders and small gas burners
  • 23:52 for clean cooking. Last year, MIGA issued guarantees of up to $37 million to a fund
  • 23:59 managed by African Infrastructures Investment Managers, and almost $6 million in guarantees
  • 24:05 to the facility for energy inclusions, off-grid energy access fund for their investments into
  • 24:11 Bboxx. We saw a unique opportunity to drive investments into the company's innovative
  • 24:16 business model, leveraging Pay As You Go mobile money payments and their off-grid solutions.
  • 24:22 [Nkemjika I. Onwuamaegbu]: For our last destination, let's zoom out to
  • 24:26 two Pan-African financial sector projects. In 2020, MIGA supported two African banking
  • 24:32 groups, Absa and FirstRand, to boost lending in the region and increase bank resiliency
  • 24:38 amid the COVID-19 pandemic. For Absa group, MIGA issued almost $500 million in guarantees
  • 24:45 to help expand financing across seven countries. Freed up capital will be focused on financing
  • 24:51 corporates and SMEs as well as on projects with potential climate corp benefits. In addition,
  • 24:58 as part of the COVID-19 response program, MIGA issued guarantees to FirstRand to support
  • 25:04 its subsidiaries. The guarantees free up capital, which allows the subsidiaries to continue
  • 25:09 their operations and whether the pressures arising from the pandemic.
  • 25:13 [Nkemjika I. Onwuamaegbu]: Both Absa and FirstRand projects are examples
  • 25:17 of MIGA projects where financial institutions have tapped into MIGA's capital optimization
  • 25:22 product, to help boost lending during the COVID-19 pandemic. Now, this is where our
  • 25:28 journey ends today. And as you can see, from all corners across Africa, MIGA has been a
  • 25:33 valuable and trusted partner for investors who want to invest in impactful project. MIGA
  • 25:39 products not only deliver more security to investors, but they also can help reboost
  • 25:45 Foreign Direct Investment in a post-COVID future. Thank you and have a great day.
  • 25:52 [Video with French audio - English subtitles on screen]
  • 30:15 [Esther Awoniyi]: That was a behind-the-scene look
  • 30:18 impact of foreign direct investment
  • 30:20 in developing countries. We're moving on now to our panel discussion
  • 30:25 for this event.
  • 30:26 Joining me for a conversation on Driving FDI to Africa
  • 30:29 is Mr. Amadou Hott, the Honorable Minister of Economy, Planning and Corporation, Senegal.
  • 30:35 Also joining us today is Cheryl Buss, CEO, Absa International. David Damiba, Managing
  • 30:41 Partner and Chief Investment Officer, Kasada Capital Management, also joins us today. Please
  • 30:46 welcome also Ethiopis Tafara, Vice President and Chief Risk, Legal and Administrative Officer
  • 30:51 at MIGA. And last but not the least, Indermit Gill, Vice President for Equitable Growth,
  • 30:58 Finance, and Institutions at the World Bank.
  • 31:00 [Esther Awoniyi]: Thank you all for joining us, taking the time
  • 31:03 out to join us today. A quick reminder to our audience, please post your questions to
  • 31:08 our panelists. There will be a live Q & A session after the conversation. Also remember
  • 31:12 to use a hashtag #FDIAfrica. Now let's get right to it. Let's begin this conversation
  • 31:18 by taking the perspective from governments. Honorable Minister Hott, could you first tell
  • 31:23 us how COVID-19 affected FDI flows to Senegal, and how the country has handled the challenge?
  • 31:30 [Amadou Hott]: Thank you very much. And thank you to MIGA
  • 31:35 for this opportunity and to CNBC for this opportunity. As we all know, the COVID has
  • 31:41 affected FDIs in Africa, especially in Sub-Saharan Africa down 12% to $30 billion. But in Senegal,
  • 31:49 we managed actually to increase FDIs thanks to the energy sector, in particular the investments
  • 31:58 in oil and gas. We have major oil and gas project going on right now with expected first
  • 32:04 oil production and gas production in '23. So the majors have been investing heavily
  • 32:11 and therefore we managed to have a 39% increase to $1.5 billion. So really no investments
  • 32:20 on the tourism sector, no investments virtually on all sectors. No FDIs basically.
  • 32:26 [Amadou Hott]: But the government continue to invest during
  • 32:30 this period in various sectors, but also put in place a economic and social resilience
  • 32:39 program of about 7% of GDP that help us actually avoid recession. We finished the year at 1.5%
  • 32:48 of growth in 2020. But in '21, we are seeing things picking up again with growth expected
  • 32:56 at around 5% this year and next year, 5.5%. We've taken some measures actually to make
  • 33:03 sure that we are attracting more FDIs in the short to medium terms.
  • 33:08 [Esther Awoniyi]: Right. Thank you Honorable Minister. Now let's
  • 33:11 bring in the perspective of the private sector and investors. I would like to ask both Cheryl
  • 33:18 and David, how your firms have navigated the pandemic within the continent, and how has
  • 33:23 the current situation changed your approach to supporting development projects? Cheryl,
  • 33:27 please go first.
  • 33:28 [Cheryl Buss]: Thank you, Esther, and delighted to be on
  • 33:32 the panel today. As we all know, we're all wrapping with the effects, both long-term
  • 33:37 and short-term of COVID, and obviously a great impact on GDP and a great impact on FDI as
  • 33:46 we've seen across the continent. Absa operating in the 12 markets that we do across Africa,
  • 33:53 I had to look and say, what is our plan going through the COVID crisis and through the pandemic?
  • 34:00 And we really took two approaches, which was protecting lives and protecting livelihoods.
  • 34:06 And so what we sought to do initially was to say, what is the medical support? How do
  • 34:11 we get involved medically in terms of PPE, in terms of really availing the countries
  • 34:18 in which we have a presence of support? And then most importantly, and the role as we
  • 34:24 play in a bank and recognizing the importance of the social impact role that we play on
  • 34:29 the continent, was around protecting livelihoods.
  • 34:32 [Cheryl Buss]: So really getting involved in terms of looking
  • 34:36 at giving support into the ecosystem, looking at giving deep relief on loans. We gave in
  • 34:44 excess of $500 million of relief to clients. And so, really played a role. I think that
  • 34:53 going forward, we see significant opportunity and I'm sure we'll unpack that later. But
  • 34:58 although FDI is done at the moment, we see opportunity in the trade space really ignited
  • 35:04 by the Africa Continental Free Trade Agreement, and that needs to be leveraged with the other
  • 35:12 infrastructural support and growth that we see a wide gap, that we see investment opportunity
  • 35:17 to. We will surely be there to support those opportunities of development.
  • 35:22 [Esther Awoniyi]: Well, great. David you are up next.
  • 35:26 [David Damiba]: Thank you, Esther. Thank you very much to
  • 35:31 MIGA for having me on the panel and for giving us the opportunity as Kasada to mention what
  • 35:37 we're doing on the continent, especially in this sector. We are focused on private equity
  • 35:41 real estate with the focus on hotels in Africa, hospitality. The platform was launched in
  • 35:47 2019, so you can only imagine that a year like 2020, which is a historic year in terms
  • 35:54 of stress test in the sector, was enormous for our sector. We see ourselves as solution
  • 36:01 providers in the sector that is already a large employer across Africa. And considering
  • 36:07 the loss of the closure of hotels, the loss of jobs on the continent and the difficulty
  • 36:13 for government to support a lot of the workers in the private sector like things that have
  • 36:17 happened in the U.S. or Europe. We see ourselves as not only solution providers, but impactful
  • 36:24 investors.
  • 36:25 [David Damiba]: What we've done during the difficult year
  • 36:27 of 2020 was basically readjust our approach to investing in this sector. Continue to be
  • 36:33 countercyclical investors. It doesn't matter what time of the cycle we're in. We are long-term
  • 36:37 investors in Africa and the sector. We adjusted a strategy a little bit by focusing a bit
  • 36:43 less on Greenfield investments and more so when acquiring hotels that are already existing,
  • 36:48 where we call Brownfield investments. It went from basically a shift in terms of investing
  • 36:54 to creating jobs, to actually job preservation, as far as Kasada was concerned. We executed
  • 36:59 that and we've acquired 10 hotels in the past 12 months. We are basically bringing our support
  • 37:05 to that.
  • 37:06 [David Damiba]: Hopefully most of the viewers have seen the
  • 37:09 video before, where we've been able to acquire hotels and knowing you require them, but we
  • 37:13 continue to invest in them. We are extremely bullish on Africa. We're very bullish on the
  • 37:17 sector that requires our capital and we are here to help, and we're here to support it.
  • 37:22 We're very much long-term investors.
  • 37:24 [Esther Awoniyi]: Fantastic, David. Indermit, let me bring you
  • 37:27 in here. From a bigger picture perspective, what is your assessment of what countries
  • 37:32 need to do to further drive investor interest? What do investors and lenders need to get
  • 37:38 better at to take advantage of investment opportunities?
  • 37:41 [Indermit Gill]: First I want to thank you very much, and I
  • 37:46 would really like to thank the Minister, Cheryl and David for those insights, because we learn
  • 37:50 a lot from them. I'll just make two short points. I guess the first one is a fairly
  • 37:56 obvious one, which is just as all African countries are not the same, all Foreign Direct
  • 38:02 Investment, whether it's to Africa or to other parts of the world is not the same. One can
  • 38:09 think of FDI as consisting of three types. The first type is resource-seeking FDI. These
  • 38:16 are investments that are for accessing Africa's natural resources like minerals and metals,
  • 38:23 and Africa gets a lot of these investments because it has a lot of natural resources.
  • 38:27 The second is market-seeking FDI. These are investments to access Africa's growing markets
  • 38:34 for goods and services. Now, Africa doesn't get a lot of these because its markets are
  • 38:39 neither big, nor terribly well integrated. But they're getting bigger and they're getting
  • 38:43 more integrated.
  • 38:44 [Indermit Gill]: So these investments are to grow. The third
  • 38:47 is what we call efficiency-seeking FDI. This is the holy grail of FDI in a sense, because
  • 38:55 these are investments to access opportunities for cutting production costs by locating production
  • 39:00 in Africa. These bring three things. It brings patient finance, it brings good jobs and it
  • 39:08 brings socioeconomic progress. This is what is related to global value chains, because
  • 39:13 most goods and services are not produced in one place any longer, they're produced in
  • 39:17 many places. Africa ought to be a big part of this, but it isn't. So these are the three
  • 39:23 things and they require different things. I can tell you more about that, but basically
  • 39:29 for the first type of investment, what Africa really requires or what African countries
  • 39:37 really require, are good institutions. For the second type of investment, it requires
  • 39:42 good institutions, but it also requires good infrastructure. For the third type, it requires
  • 39:48 both those two things, good institutions, good infrastructure, but it also requires
  • 39:53 well targeted interventions. I'm sure that my colleague Ethiopis will actually tell you
  • 39:57 about some of those.
  • 39:58 [Esther Awoniyi]: Very well said Indermit. Ethiopis, let me
  • 40:01 bring you in here. MIGA's role is to drive FDI to developing countries and Africa is
  • 40:06 a priority region. What is your reflection on how things have gone over the past one
  • 40:12 and a half years?
  • 40:14 [Ethiopis Tafara]: Thank you, Esther. As the Honorable Minister
  • 40:18 indicated, the COVID-19 pandemic has led to rising debt burdens as governments try to
  • 40:23 combat the economic impacts. Mostly through prolonged lockdowns and disrupted normal economic
  • 40:29 activity. In Africa, in particular, we've also seen a dramatic decrease in trade finance
  • 40:35 available to businesses and governments, which in turn has significantly constrained imports
  • 40:39 of critical consumer, corporate medical goods and services. But despite the impact of COVID,
  • 40:45 we've had some interesting and innovative projects over the course of 18 months, including
  • 40:51 our first support to an off-grid power project. Our first support to commercial and industrial
  • 40:59 users of telecoms. Our first solar IPP in Burkina Faso. Our first geothermal IPP in
  • 41:06 Ethiopia. The first IPP project for roads in Kenya. And first support for continent-wide
  • 41:12 hotel asset acquisition platform, and you heard from David on this. But we've also witnessed
  • 41:17 a number of trends, which I think are worth highlighting.
  • 41:20 [Ethiopis Tafara]: We've seen an uptake in Brownfield asset acquisition
  • 41:24 plays across the tourism power telecommunication and mobile money sectors. Large scale infrastructure
  • 41:32 projects are being delayed or stalled as governments focus on economic recovery efforts, and corresponding
  • 41:37 fiscal pressures. I was seeing a shift from publicly funded projects to consideration
  • 41:42 of PPP structures, but with governments very carefully scrutinizing their potential liability.
  • 41:48 We're seeing increased focus on water, telecoms, and digital infrastructure. A slow down of
  • 41:54 FDIs, investors focus on building resilience in their current pipeline of projects. We
  • 41:59 see governments considering renegotiation of existing contracts, particularly in fossil-fuel
  • 42:06 IPPs. And then a shift towards distributed energy solutions off-grid, mini-grid, metro-grid,
  • 42:14 and CNI solutions that don't rely on public sector offtake, but on a sustainable enabling
  • 42:19 environment for investments over the long-term. And finally, we see continued interest in
  • 42:23 renewable energy IPPs, in new African markets. It's highlighted with the Burkina Faso project
  • 42:29 I mentioned earlier, as well as a focus on decarbonization of fossil-fuel based projects.
  • 42:33 [Esther Awoniyi]: Well, thank you so much, Ethiopis. You make
  • 42:36 some very good points there. Before I circle back to Minister Hott, just to tell our audience
  • 42:39 that we do apologize for the audio issues that we've had. We're aware of them. We're
  • 42:40 fixing them. And we thank you for your patience. Now, circling back to Minister Hott, let's
  • 42:41 talk about solutions. What is Senegal doing now to keep FDI flow into the country and
  • 42:45 what lessons can other countries and on the continents take away?
  • 42:49 [Amadou Hott]: Thank you very much. We've been actually amending,
  • 42:55 really focusing on reforms on one side, but also on another side, really developing what
  • 43:02 we call the agropoles and special economic zones in the country. On the reform side,
  • 43:09 we've been focused on several areas. Number one is, the Compact with Africa reform with
  • 43:17 the German government, with the G20 initiative focusing on four key areas to attract more
  • 43:26 FDIs, to facilitate the business environment. Number one, it is to focus on access to land
  • 43:35 for [inaudible 00:44:38] means, access to finance, but also reforming the labor laws
  • 43:43 and the labor administration process as well, so that it's more friendly. And lastly, focusing
  • 43:50 also on human capital, basically on vocational training. So we have more young people being
  • 43:58 able to address the needs of investors. The other type of reforms was the main one really
  • 44:05 that have been keeping us busy during the COVID time, was the reforms on the PPP framework.
  • 44:11 [Amadou Hott]: We had a very, let's say complex framework.
  • 44:17 We definitely actually simplify the process, making on sure that the process is very clear,
  • 44:29 very flexible, very diligent so that we don't waste time. During that reform, we also decided
  • 44:35 to create a project preparation facility so we can prepare projects for the private sector
  • 44:43 in various sectors. In the social sectors, including the healthcare sector, but also
  • 44:50 on the economic infrastructure so that we borrow less and we help with the private sector
  • 44:59 invest more alongside the government, with the government providing the facilitation
  • 45:03 and sometimes some guarantees. I'm sure some of those PPP projects will need at the right
  • 45:09 time MIGA guarantees, because sometime we have undertakings of the government, these
  • 45:16 are the private sector. And if MIGA can cover and strengthen those undertakings, that will
  • 45:22 facilitate the investment of the private sector. On the special economic zones, we are first
  • 45:28 striking the construction of some of those.
  • 45:32 [Amadou Hott]: For the agropoles also, we are first striking
  • 45:34 the construction of those so that we can add value to our local production. We produce,
  • 45:40 let's say a lot of peanuts. We produce a lot of cashew nuts and mangoes that are being
  • 45:48 destroyed because we cannot consume everything fresh. We are trying to have those facilities
  • 45:55 areas, those agropoles, so that investors can set up their own enterprises and industries
  • 46:01 and transform locally at some value before exporting. I believe that one of the key lessons
  • 46:07 is really to have a simplified PPP framework, but also to have a project preparation facility,
  • 46:15 because otherwise we will not have investors. We usually rely on external project preparation
  • 46:21 facilities, but sometime it takes time. And now we decided to have it in-house and we
  • 46:27 will contribute our own money next to the investors to prepare projects together. Sometime
  • 46:33 we prepare it alone and then hand over to the private sector who can then invest their
  • 46:37 own money.
  • 46:38 [Esther Awoniyi]: Thank you so much Honorable Minister for that.
  • 46:41 I'm sure the private sector will be very happy just listening to those words. David, let
  • 46:46 me bring you in here. What is your prognosis of FDI trends in the region going forward
  • 46:51 and what kinds of opportunities are you looking into?
  • 46:54 [David Damiba]: Yeah, I think we were pretty big believers
  • 46:58 that FDIs, some of the countries that have added dip on it will rebound in the next few
  • 47:03 years. I think if you look at GDP growth in Africa and what happened in 2020 and the rebound
  • 47:07 that we're seeing in some of the economies in Africa, at the end of the day it ends up
  • 47:10 being quite a bit of a resilient economy in general and quite diversified in its different
  • 47:15 makeup. We're long-term believers in that. The only thing that we change is, as the cycles
  • 47:21 advance and change, we just adjust the way we invest as I mentioned earlier. I think
  • 47:26 what we're looking at now in the next 12 to 24 months is to continue to invest in the
  • 47:30 hospitality sector. We're really investing close to a billion dollars.
  • 47:34 [David Damiba]: We've already started our investment program.
  • 47:36 We've been investing close to a billion dollars in the hospitality sector that is heavily
  • 47:41 fragmented. On the downside, we will look at more Greenfield projects effectively as
  • 47:45 well. We still want to focus on that as we still want to have that part of our portfolios.
  • 47:50 So we will be looking at a few key ones and hopefully announcing them in a few months.
  • 47:56 On the Greenfield, that's one case, and on the Brownfield, we'll continue to do that
  • 47:59 because the pain that the hospitality sector has suffered over COVID, is not necessarily
  • 48:04 going to be something that hotel groups and hotels will come out within the next few months.
  • 48:09 It's going to be a long way out of that. So we remain solution providers. That's one key
  • 48:16 thing.
  • 48:17 [David Damiba]: Aside from these solutions, I think it's great
  • 48:20 to also have the Minister on the panel, we also want to oftentimes work with government
  • 48:25 effectively because we are one of the few investors who in the middle of this crisis
  • 48:29 are going into countries, trying to invest, support jobs, and create jobs. So the more
  • 48:35 we have discussions with the government, the more we can see good ways to work together,
  • 48:40 create value. We have MIGA as also guarantors from providing insurance products. We have
  • 48:46 the IFC funding us as well on the senior debt. We are bringing together all the different
  • 48:50 support groups that can happen, but the government is extremely important in terms of attracting
  • 48:54 private investors who can come in and do that. I think for us is, we don't really have specific
  • 49:00 region where investors across Sub-Saharan Africa will continue our program, but most
  • 49:06 importantly, post acquisition.
  • 49:07 [David Damiba]: Our view is continue to spend money to reposition
  • 49:11 assets in good quality, international standards across Africa. So then when you fly in from
  • 49:16 Paris, London, and New York into hotels in Africa, the standards are maintained, but
  • 49:20 the culture, the African culture, the culture of the country comes out in the asset as well.
  • 49:26 So we will continue doing our investment program with a few tweaks here and there. And ideally
  • 49:32 with the support of governments as well.
  • 49:34 [Esther Awoniyi]: Well, David, you've said it. Well said. Especially
  • 49:37 on the point with governments and the private sector. Outcomes are always better when there
  • 49:42 is a better handshake between the government and the private sector. Cheryl, let me bring
  • 49:45 you in here. What do you think the opportunities are for investments between countries on the
  • 49:50 continent? Are you just as optimistic as David?
  • 49:52 [Cheryl Buss]: Yes. I believe we are. I really think, and
  • 49:57 depending on some of that, is the key milestone which was achieved this year, and that was
  • 50:02 the implementation, the execution of the Africa Continental Free Trade Agreement, as I mentioned
  • 50:09 earlier. During a time where the economies have been really hard hit by the pandemic,
  • 50:14 it really does offer some economic promise and really offers the potential to stimulate
  • 50:22 recovery out of the pandemic. And also offers new opportunities between Africa to Africa
  • 50:29 trade, which is really needed. Now, the World Bank is looking at the Continental Free Trade
  • 50:34 Agreement to uplift in excess of 68 million people out of poverty. This is a substantial
  • 50:41 number. That being said, as successful as the Free Trade Agreement will be, or the area
  • 50:47 will be, it's hugely dependent on consistent infrastructural development and growth.
  • 50:53 [Cheryl Buss]: And as Mr. Gill mentioned, there are significant
  • 50:57 gaps. There's significant FDI interest in the infrastructure space, but there's about
  • 51:02 a hundred billion dollars per annum of infrastructural investment required. Although in some instances
  • 51:10 we've seen that this has been slow, however, we are starting to see some projects that
  • 51:15 are taking shape. Renewable energy projects, other power supply. We know that Africa has
  • 51:21 a need for energy, which will then stimulate other sectors. We're seeing other infrastructural
  • 51:27 development in roads, rail, port. We are seeing these developmental nodes pop up and importantly
  • 51:35 tagged to that, which I think goes well with the goods and services, FDI required is obviously
  • 51:41 digital. And I think that digital will continue to play a key role in the development and
  • 51:49 infrastructural development. So really, I think what we are seeing is that economic
  • 51:53 growth development and success are really linked to infrastructural development. That'll
  • 51:59 result in positive return for investors.
  • 52:02 [Cheryl Buss]: But I think also key to the success is the
  • 52:06 link up and the partnerships that we see come about in public-private partnerships. These
  • 52:12 are key critical, and I don't believe that there's one institution or one government
  • 52:17 that will be able to do it themselves. And so it really will be about a collaborative
  • 52:22 effort between commercial banks, between public sector, between private sector, and of course
  • 52:28 importantly, with development financial institutions. We are proud to have a close collaboration
  • 52:35 with MIGA. Earlier in the year, MIGA announced their support to Absa and the issuance of
  • 52:40 guarantees nearly up to the tune of $500 million for Absa. These guarantees are valid for as
  • 52:47 long as 15 years, and really allows Absa to have the relief to unlend into the SME sector.
  • 52:53 This is also key critical to the continued development and the sustainable growth of
  • 52:59 Africa.
  • 53:00 [Esther Awoniyi]: Well, thank you so much for that, Cheryl.
  • 53:01 Ethiopis, let me circle back to you. Our world leaders are to talking about economic recovery
  • 53:06 that is intertwined with a sustainable climate focus recovery. How do MIGA products encourage
  • 53:12 foreign investors to invest in climate related projects in Africa?
  • 53:17 [Ethiopis Tafara]: Thank you, Esther. Guarantees are becoming
  • 53:22 the instrument of choice for many in the private sector looking to invest in climate projects
  • 53:28 in Africa. As a result, we and MIGA have been able to catalyze private sector finance for
  • 53:34 climate projects, and we've delivered over 1.6 billion in guarantees in support of climate
  • 53:41 finance transactions in Sub-Saharan Africa, since we started tracking climate transactions
  • 53:47 in our fiscal year '16. Now, the bulk of MIGA supported climate finance projects during
  • 53:53 that period, have supported the development of cross border renewable energy projects,
  • 54:00 and solar, and wind, and hydro. However, we also covered projects that helped to green
  • 54:05 the region's financial institutions that support energy efficiency and climate-smart agriculture.
  • 54:12 Now increasingly working very closely with our clients, we're focusing our support to
  • 54:18 enhance the climate resilience of our projects. This is particularly important, given the
  • 54:25 regions' vulnerability to climate change.
  • 54:27 [Ethiopis Tafara]: We're now marrying our expertise in financial
  • 54:31 structuring and management of ESG and other risks that help mitigate the perception of
  • 54:36 risk and investing in Africa, with our expertise in climate mitigation and adaptation. This
  • 54:42 creates new opportunities for climate business. I'll mention three areas we're working on
  • 54:47 taking this approach. First, we're looking to attract foreign investors into expanding
  • 54:52 their presence in renewable off-grid and metro-grid energy, which can help underserved households
  • 54:58 gain access to clean energy. Second, we're working with our World Bank colleagues and
  • 55:04 bilateral partners in exploring how foreign investment can support decommissioning of
  • 55:09 coal-fired power plants, in a transition to green energy, with MIGA potentially providing
  • 55:15 guarantees against government commitments in that process. And finally using guarantees,
  • 55:22 we believe we can help de-risk and scale up the region's role in carbon markets, given
  • 55:28 its abundance of natural capital that can serve as a basis for carbon credits. So we
  • 55:33 think working with the public and private sector, we're quite optimistic that we can
  • 55:39 take in this approach, continue to mobilize for an investment into climate opportunities,
  • 55:44 and support both mitigation and adaptation that will serve the development objectives
  • 55:49 of the continent.
  • 55:50 [Esther Awoniyi]: Well, thank you so much Ethiopis. Indermit,
  • 55:54 Let me bring you in here. I believe this will be my last question to my panelists. Just
  • 55:58 a quick word to our audience, and we will take about three questions. Thank you so much
  • 56:01 for sending in your questions. We see your tweets. We see your retweets. Thank you also
  • 56:05 for using the hashtag. We'll come and take about three questions from our audience after
  • 56:10 this. So Indermit, let me just ask you this last question. What are the policies can governments
  • 56:16 adapt that would further help catalyze FDI in Africa, particularly in transformative
  • 56:22 sectors that foster greater equity and economic growth.
  • 56:26 [Indermit Gill]: Excellent question, Esther, and a very difficult
  • 56:30 question. But just as I talked about three types of FDI earlier, I want to emphasize
  • 56:36 two aspects of this FDI. The first one is quantity, which helps the economy grow, the
  • 56:42 second one is quality, which makes sure that the average African citizen actually benefits
  • 56:47 from this growth. I think that if one looks at these three types of FDI, you actually
  • 56:52 find that you have slightly different priorities in terms of quality and quantity. For example,
  • 56:58 for resource-seeking FDI, I'd say that the top priority is quality. We want to be sure
  • 57:04 that the FDI actually benefits the owners of these natural resources, the ordinary people.
  • 57:09 For example, the deals made by foreign investors and say, oil in Chad or copper in Zambia should
  • 57:16 be transparent and fair. That means that the folks who are bringing the money should earn
  • 57:23 a fair return, but the government should get revenues and the people should get the benefits
  • 57:28 of these revenues.
  • 57:29 [Indermit Gill]: I think that the institution, the highest
  • 57:32 priorities are resource sector governance and public financial management. Now for market-seeking
  • 57:38 FDI, I think the big issue along the lines of what Cheryl said, has to do with integration.
  • 57:45 Basically, this is because Africa is fragmented into many small markets, much as how Europe
  • 57:50 was 30, 40 years ago. But Africa, if it were just one economy, it would be $3.5 trillion.
  • 57:58 But the problem is that Africa has a lot of small economies, so you have to integrate
  • 58:02 these markets and the [ACFDA 00:59:07] will definitely help in this one. But this is very
  • 58:10 difficult business. One has to be patient because even the European single market has
  • 58:16 a lot of unfinished business, especially in the market for services. So one has to be
  • 58:20 patient with this one. The third part, the part which is going to be the hardest is the
  • 58:27 efficiency-seeking FDI.
  • 58:28 [Indermit Gill]: Here you want both quality and quantity. This
  • 58:31 is a massive agenda. Basically, any developing economy has to get help from organizations
  • 58:40 like the African Development Bank, the World Bank, the IFC, and of course, MIGA, because
  • 58:45 this means that you have to take big risks when you're bringing in FDI of this sort.
  • 58:51 And because this means locating a part of your production, that is part of a larger
  • 58:57 global value chain in a poor country, political stability starts to matter. Infrastructure
  • 59:02 quality starts to matter. All of these things. And you have to get this mixed right. You
  • 59:06 can't rely just on fiscal incentives, just on special economic zones, and so on. Those
  • 59:11 will be important, but you need all of these other things along the lines of what the panelists
  • 59:15 have said.
  • 59:17 [David R. Malpass]: Thank you so much, Indermit, and also a big
  • 59:21 thank you to all our panelists for today. Sharing this very insightful comments and
  • 59:26 of course, on Foreign Direct Investment on the continent, how the private sector can
  • 59:32 have a better handshake with government. And of course, mounting all the challenges, particularly
  • 59:37 this post-COVID world that we're all living in. Thank you so much for your time today
  • 59:42 on the panel. Also, thank you to our audience. Just as quickly, I mentioned that we know
  • 59:47 we're running slightly over time, but we just want to quickly accommodate some of our audience
  • 59:53 questions. I'll just quickly take one. And perhaps I'll just choose one of the panelists
  • 59:57 to answer the question. I'll start with this question. Perhaps the Honorable Minister Hott
  • 01:00:03 can answer this question for us. It says, how can FDI accelerate the growth of the African
  • 01:00:09 Continental Free Trade Agreement? I know that is already in effect. Continental 1.2 billion
  • 01:00:17 people, potential GDP of $2.5 trillion. Minister Hott, what are your comments on this?
  • 01:00:24 [Amadou Hott]: Yeah, it's a great question. We definitely
  • 01:00:30 need more FDIs towards Africa or intra-African FDIs basically, so that we can produce more
  • 01:00:40 in Africa and sell within Africa. Because otherwise, the Continental Free Trade Area
  • 01:00:48 will just provide the opportunity for people investing outside the continent and producing
  • 01:00:54 outside the continent, to just export massively into our continent by going through, let's
  • 01:01:00 say some countries, to reach the whole continent. This Continental Free Trade Area will be quite
  • 01:01:08 interesting. If the investments is happening inside Africa, the value added is happening
  • 01:01:14 inside Africa, and then exporting to other African countries, from one African countries,
  • 01:01:25 let's say. I think our governments have to really fast track all the reforms to make
  • 01:01:30 the business environment friendlier so that people can say, let me go to Africa, produce
  • 01:01:38 there, sell into Africa, instead of producing outside the continent and then export into
  • 01:01:44 our continent.
  • 01:01:45 [Esther Awoniyi]: Yeah. Thank you so much Honorable Minister
  • 01:01:47 for that. Now this next question, I think I'm going to pose this question to Ethiopis.
  • 01:01:51 Now it says, are there any criteria that make a country more favorable and open to Foreign
  • 01:01:56 Direct Investment? Mr. Tafara, if you could answer that.
  • 01:02:05 [Ethiopis Tafara]: I started by saying certainly, Esther. There
  • 01:02:12 are conditions that make for a more favorable setting for Foreign Direct Investment. It
  • 01:02:21 obviously depends on the sector, but the regulations around a given sector's activities frequently
  • 01:02:30 will determine the comfort and the appetite that Foreign Direct Investors have, for pursuing
  • 01:02:38 a project or an investment in that particular country. So it very much depends on the sector,
  • 01:02:44 but certainly the ability to get your money out is a critical factor. The ease with which
  • 01:02:52 you can get services and products that you need for a particular project investment is
  • 01:02:59 also a factor.
  • 01:03:00 [Ethiopis Tafara]: There are a number of factors. But yeah, I
  • 01:03:03 think you'll have to look at the particular sector in which you're interested to develop
  • 01:03:07 as a government, as a country and determine what you may need to ease in terms of regulation
  • 01:03:12 or which may need to change in terms of regulation, to actually facilitate the investment that
  • 01:03:16 you're seeking. It will be very sector specific. But investors usually have a bottom line,
  • 01:03:24 frequently have shareholders, and they have criteria that they meet. So taking those into
  • 01:03:29 account, you can determine what you may need to do, to make it easier for direct investors
  • 01:03:37 to consider your market.
  • 01:03:38 [Esther Awoniyi]: Very well said. Cheryl, perhaps I can ask
  • 01:03:40 you this. We're just going to take this last question. What criteria should businesses
  • 01:03:45 and entrepreneurs meet or tips to keep in mind when an opportunity such as FDI is presented
  • 01:03:51 to them?
  • 01:03:52 [Cheryl Buss]: I think that one of the biggest things is
  • 01:03:54 around long-term appetite. You know that Africa can be quite cyclical, so even investors looking
  • 01:04:01 at coming into Africa with a short-term investment attitude, I don't think that's the right continent
  • 01:04:10 for investment. I think that Africa is one that will offer great return. It offers great
  • 01:04:15 opportunity. But the investment and the real commitment has to be there. It has to be long-term
  • 01:04:19 in nature, and then it has to have the ability and the sustainability to handle the waves
  • 01:04:25 that may come. We've seen how economically hit Africa's being, through the COVID pandemic.
  • 01:04:32 And so you need to know that you have the ability to ride the waves when they're ups
  • 01:04:37 and when they're downs. Your investment policy needs to be one that keeps the capital in
  • 01:04:43 there for the long-term. There will surely be a return and success on it, but it's around
  • 01:04:48 the investment appetite on a sustainable basis.
  • 01:04:52 [Esther Awoniyi]: Well, thank you so much, Cheryl. Now, we have
  • 01:04:55 a plethora of questions that our audience have sent in and I'm quite thrilled to see
  • 01:05:01 just the interest and of course the enthusiasm, and part of the audience sending in all these
  • 01:05:05 questions via different online platforms. They're showing of course how very much interested
  • 01:05:11 you all are on this particular topic. But I'm afraid that's where we're going to have
  • 01:05:16 to live it with the questions. But of course, like I said earlier, this is just the first
  • 01:05:20 in an annual series. The conversations will continue. You can continue to engage on the
  • 01:05:27 MIGA platform. Social media handles, of course, continue to engage MIGA on this particular
  • 01:05:33 topic.
  • 01:05:36 You have been watching a live event hosted by the World Bank's Multilateral Investment
  • 01:05:40 Guarantee Agency, MIGA.
  • 01:05:41 I'm Esther Awoniyi, I've been your host and your MC.
  • 01:05:50 (music)
  • 01:05:54 For more on how MIGA is driving FDI to Africa, visit us at: www.miga.org
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Hashi

Can u simplify what MIGA covers.Thks
Tue, 11/30/2021 - 09:23
Hashi

Is there MIGA coverage avialable for SOMALIA. How do we access it. We want to cover our overseas investors
Tue, 11/30/2021 - 09:23
Hashi

Company based in Somalia. How do we access MIGA gurantees for our potential overseas investors/ JV company in Industrial proj..Thks
Tue, 11/30/2021 - 09:23
John Akere

Is Cameroon one of the area of interest for foreign direct investors?
Tue, 11/30/2021 - 09:24
Jorge forester

PPP is the way to go...
Tue, 11/30/2021 - 09:24