Foreign direct investment key to Africa’s development, new UN-Habitat report says

By on 06/21/2018

UN-Habitat Deputy Executive Director Dr. Aisa Kirabo Kacyira launched a new report that investigates the effect of foreign direct investment on the continent’s cities.

 The State of African Cities 2018 report says that foreign firms and investors in African cities can play a catalytic role in the development of the continent.

 Speaking during the event, Dr. Kacyira said the report was a ground breaking one because instead of focusing on urbanisation, it was looking at foreign direct investment.

“This report takes us in a new, exciting direction as its subtitle The Geography of African Investment makes clear. Instead of focusing on urban planning, this 2018 State of African cities report explores how Africa can plan to finance its development through attracting foreign direct investment (or FDI) to its cities and guides us through the complex subject of global investment in Africa.

As we know, Africa is urbanizing at an extraordinary rate – with tens of thousands moving to cities every day. Half of the continent is expected to be living in cities by 2030 bringing the familiar challenges – unplanned urbanization, informal settlements, poverty, inequality, unemployment humanitarian crises, conflict, she said.

In his speech, Marcellin Ndong – Lead Economist, the African Development Bank (AfDB) Nairobi Regional Office said the institution had invested some USD 35 billion in infrastructural development across the continent. “We must focus on developing our cities because they generate 55 percent of the continent’s GDP,” he said.

The report’s lead author Prof. Ronald Wall said that Western Europe was the lead investor in Africa. “Some of the things investors look for include domestic market size, trustworthiness available credit are some of the determinants of FDI in Africa,” he said.

Titled ‘The State of African Cities 2018 report: The geography of African Investment’, it states that  Foreign Direct Investment (FDI) “if guided wisely can provide credible solutions to urban poverty and unemployment alleviation” by supporting Africa’s shift from growth dominated by the primary sector to one led by manufacturing and knowledge intensive industries.

Cities account for around 70 per cent of global GDP and UN-Habitat’s New Urban Agenda (2016) stresses their role as vehicles for inclusive and sustainable economic growth.

 “There is a clear and pressing need for increasing foreign investment in Africa. Financial and policy interventions are needed that support Africa’s emerging transformations and strengthen its already unfolding shift from FDI in the primary sector (resources), towards secondary and tertiary sectors (manufacturing, services and hi-tech).

“Such interventions would facilitate structural economic transformation and generate higher value added economic activities. FDI is a key resource to expedite Africa’s growth potential, since it promises to bring not only financial resources but also new technologies, knowledge and expertise. Investment promotes employment, productivity and competitiveness through entrepreneurship in investment destinations,” the report says.

According to the report substantial private capital injections can, for instance, help close Africa’s huge gap in physical infrastructure, improve the quality of the built environment, and make the continent a more attractive destination for global FDI.

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Foreign investment could help lift millions of Africans out of poverty

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This is a shortened version of the report – the full report will be available here shortly

View the Report:

The State of African Cities 2018 - The geography of African investment

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