Around 4.5 trillion USD per year needed for basic infrastructure
Ethiopia received 953 million USD worth of Foreign Direct Investment (FDI) in 2013, according to the World Investment Report 2014, by the United Nations Conference on Trade and Development (UNCTAD).
The World Investment Report presents the latest data and trends in foreign direct investment and policy developments.
According to Ban Ki-moon, Secretary General of the United Nations, the just released report is aimed at offering a global action plan for galvanizing the role of businesses in achieving future sustainable development goals, and enhancing the private sector’s positive economic, social and environmental impacts. “The Report identifies the financing gap, especially in vulnerable economies, assesses the primary sources of funds for bridging the gap, and proposes policy options for the future,” he stated.
Released on Tuesday June 24th it states that Ethiopia had increasingly become a growing recipient of foreign capital flows and the most attractive destination of investors in the region in 2013.
The report which came out under the subtitle ‘Investing in the Sustainable Development Goals’, attributes Ethiopia’s notable progress in attracting FDI to the Government’s right mix of industrial policies and strategies which created enabling factors for increasing capital flows into the country in the selected priority areas for investment.
It further stated that the country’s industrial strategies played a crucial role in attracting foreign investors in the manufacturing sector and bolstering the growth of FDI.
Ethiopia used FDI to build a Climate Resilient Green Economy, the report added, suggesting it should remain seized with the advancement of its investment landscape to catch up to top FDI recipient countries.
“In East Africa, FDI increased by 15 percent to USD 6.2 billion as a result of rising flows to Ethiopia and Kenya. Kenya is becoming a favored business hub, not only for oil and gas exploration but also for manufacturing and transport; the Ethiopian industrial strategy may attract Asian capital to develop its manufacturing base,” the report reads.
Regarding other parts of the continent, the report states that FDI flows to North Africa decreased by 7 percent to USD 15 billion. Central and West Africa however saw decline in inflows to USD 8 billion and USD 14 billion, respectively, in part due to political and security uncertainties.
Regarding the Sustainable Development Goals (SDGs), the report states that the private sector contributions can take two main forms; good governance in business practices and investment in sustainable development.
“This includes the private sector’s commitment to sustainable development; transparency and accountability in honoring sustainable development practices; responsibility to avoid harm, even if it is not prohibited; and partnership with the government on maximizing co-benefits of investment,” it reads.
The report says that Sustainable Development Goals will have significant resource implications across both developing and developed worlds.
Estimates for total investment needs in developing countries alone range from USD 3.3 trillion to USD 4.5 trillion per year, for basic infrastructure such as roads, rail and ports; power stations; water and sanitation; food security, climate change mitigation and adaptation, health and education.