Creating an attractive environment for FDI in Africa across all levels
Gender Parity - In order to attract FDI, the participation of gender parity in the labor market is important. Equal participation of both women and men promotes more knowledge, skills and value addition to the labour market. In Africa, women represent a relatively high share of the total workforce but remain underrepresented in the formal economic sectors.
Food Security - At the global level, international organizations need to make African food urban food security a key priority. They can help promote the governance required to attract multinational firms in the food sector.
Agricultural revolution - The potential for producing food in Africa is high due to the availability of high arable land. Africa should focus on feeding other parts of the world to stimulate export revenues and overcome the existing international food exports and land exploitation.
Favorable Policies - Policies play an important role in ensuring that the benefits of FDI in all sectors are evenly distributed. In the manufacturing and services sectors, the high economic growth spin-off is only available in select countries.
Target different FDI sources - Investments between cities and countries is highly encouraged to foster diversification and become more complementary to each other. This should be based on local advantages, interregional cooperation, and preferences of investors. To coordinate this, the Africa Union could set up a strategy for FDI attraction across the continent.
Economic diversification - to help position cities as regional and international investment hubs for FDI, diversifying the economic sectors is needed. This also increases the resilience of cities against volatile global investment changes across different sectors.
Interdependence between countries and cities for FDI corridors - to build a stronger intra-regional market, regional blocs should try to join forces. To achieve this, better regional infrastructural interconnections should be established to foster customs agreements. For example, across the Gulf of Guinea there consists of five adjacent countries namely: Côte d’Ivoire, Ghana, Benin, Togo and Nigeria. Abidjan in Nigeria has engaged in FDI corridor through a regional programme facilitating road transport and transit among Economic Community of West African States (ECOWAS) and West African Economic and Monetary Union (WAEMU) countries. Together with regional cooperation institutions and provisions, the Regional tax and tariff harmonisation
Regional Integration - To attract multinational firms, regional trade barriers should be lifted because FDI correlates with the trade.
Effective road and rail networks - City, country and regional linkages through road and rail transport help to expand the market reach and in turn attract FDI. This is especially important for connecting landlocked countries with port cities. In Cairo, well developed infrastructure, good road networks, availability of skilled workers and a conducive foreign investment environment ease the way of doing business in the country which makes it a desirable location for investment. A network of highways connects Cairo to all other major cities in Egypt such as Alexandria in the North, Port Said and Suez to the East.
Tapping into renewable energy - In addition to promoting ‘green growth’ this sector generates more job opportunities as compared to the traditional energy sector. This is increasingly becoming a concern for multinational firms as many seek to comply with targets for reducing carbon gas emissions.
Define the roles of cities - In order to utilize FDI, cities need to be assigned with specific roles such establishing industrial sites and hosting technology valleys with the goal of building economies of scale.
Geographic Proximity - An important consideration for multinational firms is the geographic proximity to Africa. In North Africa, most of the FDI is received from Europe and the Middle East while in East Africa, FDI originates from Asia. If countries want to retain and strengthen their position as key destinations for investments, they need to accommodate the locational preferences of multinational firms and factor in the origin of most FDI.
Creation of technological hubs - Hi-tech FDI is a promising growth sector that can address challenges to unemployment, poverty, and inequality. With good capacity skills and better-quality institutions, hi-tech FDI ensures a positive impact on reducing inequality and promoting income distribution.
Reliable mobile networks and internet access - This creates an attractive environment for knowledge-based FDI to help promote the hi-tech sector. This attracts knowledge-based FDI and are important for the growth of the hi-tech sector. Emphasis on inclusive technologies and education also importantly requires the promotion of gender parity in the labor market, and public authorities should ensure the promotion of women in all formal sectors of employment.
Political Stability - A political environment in which there are no violent contestations and disruption, are key attractions to potential investors and important in investment decisions. A stable political environment makes investors feel more secure and confident that their money is not overly at risk. Political stability and predictability go hand in hand. For businesses to thrive and prosper, they must operate in an environment where they are able to model their growth paths and expansion strategies over the medium and long term.