Why do some countries attract more direct foreign investment than others? Is it simply a question of lack of confidence in the countries that least attract the right investors and investments?
These are questions the Kufuor administration, nine months into its four-year term in office is grappling with.
Dr. Kofi Konadu Apraku, Trade and Industry Minister bared the government's frustrations at the lack of foreign direct investment in the country at the launch of the United Nations' World Investment Report in Accra on Wednesday.
Foreign investment in Ghana is said to have fallen from $233.84 million in 1999 to $132 million in 2000 due to difficulties in the macro economic environment.
Dr. Apraku said even if 10 per cent of investors President Kufuor has talked to decide to invest in Ghana, the country's economy will improve within a short time, saying "maybe it is too early to expect results."
The Minister, therefore, asked stakeholders in industry to help government find a solution to the problem of lack of foreign investment in the country.
Though the Kufuor administration appears to have a lot of goodwill and support here and abroad that alone is not enough to attract investors into the country, Apraku observed.
"We don't want to repeat programmes and policies that have not worked in the past," he said stressing "Let us find out what is making it difficult for people to invest in Ghana."
Dr. Apraku tasked Ghana's research think-tanks such as the Centre for Policy Analysis (CEPA), Institute of Economic Affairs (IEA), and the Ghana Investment Promotion Center (GIPC) and all other stakeholders to come out with fresh ideas that can translate into direct foreign investment in the country.
The World Investment Report, which was released by the United Nations Conference on Trade and Development (UNCTAD), presents a disastrous performance from Africa's perspective. While global Foreign Direct Investment increased in 2000 by 18 per cent to a record $1.3 trillion, FDI to Africa reduced, bringing the continent's share in world FDI inflow to below one per cent ($ 9.1m). Worse still, prospects for Africa in 2001 is very bleak.
World FDI flows are also likely to decline by 40 per cent this year, to $760m , according to projections released by UNCTAD. Representing the first drop since 1991 and the largest over the past decades.
The projected fall is attributed to a decline in cross-border mergers and acquisitions, which account for the bulk of FDI.
The Minister, who said he was humbled by the report remarked: "Africa continues to be sidelined in world trade. Therefore now is the time to reflect at the areas where we didn't perform and chart a new course"
He tasked all, especially researchers to take a critical look at the report to see what has not been done right and offer concrete suggestions for policy review. He pledged that such suggestions would be given prompt attention.
Dr. Apraku urged the new GIPC management headed by Kwasi Abeasi of the Private Enterprise Foundation (PEF) to ensure that all rules and procedures that engenders investment are streamlined to make Ghana a one-stop investment centre.
Dr. Joe Abbey, Director of CEPA in his remarks said, the starting point for an effective linkage programme is a clear vision of how the F.D.I fits into the overall development strategy, and more specifically the strategy to build production capacity.
"The vision has to be based on a clear understanding of the strengths and weakness of the economy and of the challenges facing it in a globalised world".
Dr. Abbey explained that the programmess for investment must address the competitive needs of the domestic enterprise sector, as well as, their implications on government policies.
He emphasised that there are no automatic benefits from FDI, although the potential gains can be very high. He, however, pointed out that not all linkages are beneficial, what needs to be done is policies must be tailored to the specific needs of the country and the challenges posed by globalisation.
Philip Owusu of the Institute of Economic Affairs, in a contribution said developing countries ought to identify and develop their strengths as far as products they can market to investors are concerned.
This he said calls for a new set of investment promotion strategies for targeting location needs and the identification and nurturing of cluster of industries that capitalise on a country's competitive advantage.
This new strategy, he says differs from the first generation of investment promotion which was essentially anchored on the adoption of market friendly policies and the second generation of investment policies which anchored on marketing the country.
Owusu urged the government to see to the provision of information and matchmaking as well as encouraging, foreign affiliates to participate in programmes that can can ensure the transfer of technology to local firms.
"Linkage promotion policies should be congruent with development strategy and should be undertaken in partnership with private sector and other stakeholders"
The Director of Research and Development of the G.I.P.C., E.M.Gyasi, said there is no formal coordination between the various agencies like the Free Zones Board and the Bank of Ghana to accurately assess F.D.I. inflow and stocks in the country.
He said together with the DFID, a task force has been set up to assess the stocks in the country.
Gyasi, said, the flow of FDI into Ghana dipped from $ 233.84 million in 1999 to $132 million in the year 2000.
He cited the decline in the value of the Cedi, high inflation rate, and also the fact that last year was an election year, which forced the public to adopt a "wait and see attitude" as some of the reasons for the fall. He, therefore, subscribed to Dr. Apraku's call on the public to support the government's efforts at stabilising the economy.
