Investment Promotion Agencies from the EAC partner states have agreed on a policy framework that will put in place ways of snareing and increasing Foreign Direct Investments (FDIs) in the region.
Participants met in Kigali for three days, an event organised by SEATINI Uganda in collaboration with Diakonia Regional Africa Officer and Both ENDS, all Non-Governmental Organizations.
Speaking on the first day of the workshop, Jane Nalunga, Country Director of SEATINI said that there is need to revise some agreements and address gaps in the current policy frameworks that do not bring benefits to the people of the region.
“The policy framework is weak and do not oblige investors to employ our people. When they come (foreign investors), some of them bring their own people. Some policy frameworks were signed 10 or 15 years ago and we have not been able to revise them,” Nalunga noted.
She sais that investments should be of a win-win situation between investors that have injected their money into the economy and the country as well as its people.
East African countries should seek to solve inefficiencies in their systems and investors also bring changes and add value to, for example, the regional agricultural products.
Cyrus Nkusi, CEO of Rwanda Governance for Africa said that despite a very good environment on the continent, investments are not faring well.
He said this is due to some policies that governments set up to fit in their needs and not the needs of the investors and the people.
“Often, governments develop policies that are good for them but not good for all the citizens. This is due to corruption, favouritism as well as political and security issues when countries do not get along very well,” Cyrus said.
He noted that supporting intra African trade would be a key element that could develop the African continent so that a country cannot export products to other countries while its neighbour also need the same products.
He suggested that for investors to be willing to invest in Africa, the continent should make sure that there is security and no corruption.
Dr. Burghard Ilge of Both ENDS also said that that some investment treaties do not help but caused a lot of problems that governments had not thought could be used against them.
He noted that, however, they were not meant to prevent investors from coming in but to attract them. What is more, quitting them is not easy.
“If you have signed these treaties and later see that you went too far in giving them rights, it is very difficult to revise them. This is why a lot of investors who have smart lawyers have realised that they do not like the things that the government is doing and threaten to sue the state for compensation,” he said.
While reforms to attract and guarantee foreign direct investments (FDIs) into countries may have resulted into greater FDI inflow according to the World Investment Report of 2017, which reported that EAC received about US$ 7 billion in 2016, a figure that is projected to rise in the years to come, the region’s level of development has remained undersized.
The promises of FDI have yet to be realised. According to World Bank data of 2014, Burundi, Rwanda, Uganda and Tanzania were ranked among Africa’s 25 poorest African states each possessing GDP per capita of US$295.1, US$652.1, US$677.4 and US$998.1 respectively.