African countries improve investment policies

Ethiopia and the United Republic of Tanzania have made significant progress in improving their investment climates based on recommendations issued in 2002, the secretary-general of UNCTAD said on today.
In addition, Rwanda, Viet Nam, Argentina and Costa Rica have effectively implemented e-regulations that make governments' interactions with citizens and businesses more simple and clear.
Gecretary-General Supachai Panitchpakdi’s remarks came during the second day of the week-long session of the UNCTAD Investment, Enterprise and Development Commission. The afternoon meeting focused on a follow-up to investment policy reviews carried out in 2002 and to work done by various countries implementing the e-regulations system developed by UNCTAD that undertakes investment policy reviews of developing and transition countries at the request of their governments. The in-depth studies evaluate investment regimes and advise governments on how to attract increasing amounts of foreign direct investment and on how to use it to spur effective, sustainable economic development. To date, UNCTAD has completed investment policy reviews for more than 30 countries worldwide.
Supachai said that Ethiopia and the United Republic of Tanzania have made significant progress in recent years in implementating the recommendations and in improving their business environments and investment attractiveness.
In the case of Ethiopia, he highlighted positive results achieved in the agriculture and leather sectors, which had resulted in improved domestic production and better environmental standards. The country still faces major constraints in terms of basic infrastructure – such as electricity, roads and telecommunications. However, gradual progress made to improve and coordinate investment promotion activities at the national and regional levels is encouraging, he said, applauding Tanzanian government's breakthrough in reducing the cost and time of doing business – such as the reduction in the number of tax procedures and their online access, as well as business start-up procedures. He also said that the United Republic of Tanzania had effectively pursued regional economic integration with the East African Community and the Southern African Development Community.
Speakers at the meeting noted that Tanzanian port services continue to be in high demand. They stressed the need for more investment in this area and called for a modern management of ports.
The ambassador of Ethiopia to the United Nations at Geneva told the meeting that a national coordinating committee for investment has been established with representatives from all relevant ministries and public institutions. He highlighted Ethiopia ’s efforts to improve the investment climate over the past few years and described some of the main sectors with high investment potential, such as agriculture, tourism, construction and mining.
The executive director of Tanzania Investment Centre, Ole Naiko, said Tanzania has developed sectoral policies to promote investment in mining, tourism, education, and agriculture. In agriculture, Tanzania has adopted a corridor approach with the objective of promoting large-scale commercial farming as well as 'out-growers' schemes. In education, the country has been engaged in comprehensive curriculum reforms and has sought to promote vocational training. Naiko also stressed the importance of developing business linkage programmes between foreign investors and local small- and medium-sized firms.
Private investors at the meeting said competition to attract FDI is intense and foreign businesses have a large choice of potential destinations for investment. They said efforts to improve investment frameworks are indispensible but are not always sufficient to attract foreign investors, particularly in small countries. Such countries need to step up efforts to publicise business opportunities by implementing more proactive information and targeting campaigns, including with medium-sized companies in developed economies.
Supachai also cited four examples in which countries have adopted effective measures to facilitate business and promote good governance. He said that these efforts highlighted the importance of clarity and simplicity in government interactions with citizens and businesses – and the importance of effectively publicising administrative rules.
Rwanda has established a single window for company creation, which makes establishing a business rapid and straightforward, he said. Viet Nam, he said, has installed the UNCTAD e-regulations system to harmonise the procedures to handle inflows of foreign direct investment in three main provinces and intends to extend the project to six other cities. These actions recognize the importance of providing transparency in rules and procedures, he said.
In Argentina, he said, the Ministry of International Commerce, Tourism and Investment of Chubut Province is implementing the e-regulations system with UNCTAD's assistance. Costa Rica has effectively used information and communications technology to facilitate business and has employed the system as a useful tool for simplifying procedures, he said.
The e-regulations system involves a thorough review – generally by UNCTAD experts working in cooperation with consultants – of the steps involved in basic transactions between businesses and governments such as registering firms, carrying out investment and registering for and paying taxes. The frequent discovery is that these processes are more complex and confusing than realized. As a result, they are often made simpler and more transparent. The processes are then posted on government websites in a step-by-step fashion, giving the names of the officials concerned, their contact information, the documents needed and the costs involved.
Supachai said that clear, simple and widely accessible rules are essential to promoting investment and encouraging the payment of taxes and social contributions, thus increasing public revenues and, therefore, enhancing the capacity of States to invest in needed physical, economic and social infrastructure.
He also thanked Luxembourg government for its contribution of 2.6 million euros to the UNCTAD e-regulations project.