The United Nations Conference on Trade and Development taking place in Nairobi over the course of this week is yet another time for governments and policy-makers to reflect on
trade, as a catalyst for development.
Like many other intergovernmental institutions, the mandate of UNCTAD is large and ambitious, but its productive impact is difficult to measure.
UNCTAD works mainly with governments to support developing countries to use trade, investment, finance and technology to access the benefits of globalisation more fairly and effectively. However, it remains to be seen whether globalisation is working for or against sub-Saharan Africa, especially because the drawbacks of globalisation are much more visible than the benefits.
Although there are signs of progress, sub-Saharan countries remain the least competitive globally, and they are hardly keeping up with the pace of advancement with the rest of the world.
Most countries continue to rely on other countries for their progress, whether in trade, investment or finance. The UNCTAD analysis of the flow of global Foreign Direct Investment shows that in spite of a rise in FDI flows by more than 38 per cent in 2015, the inflow to Africa declined by seven per cent. Consequently, Africa’s share in global FDI fell to 3.1 per cent from 4.6 per cent in 2014.
In particular, growing investor confi dence in Egypt led to substantial increase in FDI fl ows in North Africa as the country continues to be a major manufacturing base in Africa, especially because of low energy prices.
However, the increase in FDI in North Africa was off set by the decreasing flows in sub-Saharan Africa, especially weighed down by weak oil prices and weakening local currencies in West Africa.
West and Central Africa had the largest fall in FDI at 18 and 36 per cent respectively.The East African region received $7.8 billion in FDI, a decline of two per cent from 2014.
Although Kenya and Ethiopia recorded some increase in FDI, this was not sufficient to off set the decline recorded in other East African countries.
In the Southern Africa region, FDI flows increased by two per cent to $17.9 billion. While the future outlook for Africa remains positive, and FDI inflows are expected to bounce-back in 2016, the path to development for most countries is far from clear.
More needs to be done, especially to support FDI into the manufacturing sector. We hope the UNCTAD meeting in Nairobi will be a step forward towards the benefi ts of globalisation for Africa.
Karen Kandie is a fi nancial and risk consultant with First Trident Capital