Collating and disseminating FDI data and related information in Africa – Challenges and opportunities
Collating and disseminating foreign direct investment (FDI) statistics and related information is important for many reasons. It helps government officials and policy makers formulate appropriate investment policies and laws, which in turn enhance the attractiveness of host countries. Researchers and analysts would be able to assess the effect of investment-related policies on FDI, and impact of FDI in the host economies. FDI activities could be used to measure economic integration and liberalisation.
Disseminating investment information (e.g. investment related rules, regulations, laws, policies, amendments/changes, etc.) is equally connected to governance principles of transparency and accountability as well as access to information. Governments are required to respect their transparency-related obligations to other state parties, investors, citizens and other stakeholders. For instance, investment treaties often oblige State Parties to notify and publish their domestic investment rules, regulations, laws, policies, amendments/changes – subject to confidentiality.
However, finding official and reliable FDI data and information is a major problem particularly in developing countries including Africa. It is mostly related to lack of capacity to collect, compile and disseminate investment data and information.
Sources of FDI data and information
Africa’s FDI statistics are often recorded and disseminated by international organisations. These include the UNCTAD (World Investment Directory; FDI Statistics Website), World Bank (Investing Across Borders; World Development Indicators), IMF (Balance of Payments and International Investment); and OECD (Foreign Direct Investment Statistics). Other sources include regional institutions like EUROStat, European Central Bank and the US Bureau of Economic Analysis which collect and report information on the activities of foreign affiliates and multinational companies.
Some consulting firms also gather and disseminate FDI related data. For example, Financial Times (fDiMarkets) and Enrst & Young, are useful resources. There is some data that is available at the country level. FDI reported at country level is sometimes disintegrated (i.e. reported by different institutions), not user-friendly or downloadable (for example in pdf format, excel), one language only (e.g. Arabic, English, Portuguese, French), and out of date. The data from these sources varies considerably. The discrepancies are largely due to the different methods used to collect, report and define the data applied by these institutions.
There is not yet an African continental organisation/body/institution that collates and disseminates FDI data
In most instances, the multilateral organisations collect the data directly or indirectly from national statistics organisations. But the major problem is that some of the African countries do not always report their data or report incomplete data due to many reasons ranging from confidentiality to lack of technical capacity. The lack of reliable and timely FDI data poses significant challenges for analysing and monitoring investment developments.
FDI and information collected and reported
The reported FDI (comprising equity capital, reinvested earnings and intra-company loans) data is in the form of outflows and inflows (e.g. UNCTAD). National sectoral and industry information, bilateral FDI flows (country to country), FDI contribution to GDP and employment, among others, is not always accessible and published. FDI activities influence development and growth, employment creation and welfare within the host economies. Collecting and reporting this data would assist governments, researchers or analysts to monitor and evaluate the impact of FDI within host economies, and to adopt the right policies that will ensure that FDI contributes to the development and growth of host countries.
International investment agreements are not always available or published. Sometimes the publication of national investment related laws, regulations or amendments thereof is disintegrated. It is difficult to sometimes ascertain which countries have signed or ratified such treaties. For example, there is uncertainty as to the actual signatures and ratifications of the SADC Finance and Investment Protocol.
Addressing problems related to collection and dissemination of FDI data in Africa requires a concerted effort of countries – individually and collectively – as well as international and regional organisations.
There is need to build technical capacity and financial resources among African government officials and statisticians’ capacity to collect, compile and disseminate data. Collaboration of international organisations, intergovernmental organisations and development partners in training human resources and providing technical assistance is critical. WTO, ITC and UNCTAD, for example, have collaborated to develop the SDG Trade Monitor, which offers a one-stop shop for users to obtain updated and disaggregated official data on global trade’s contribution to the UN Sustainable Development Goals. UNCTAD has collaborated with the African RECs and the African Union Commission to develop a mechanism to collect, report and monitor NTB information in Africa. More national and regional cooperation among relevant institutions could also promote a harmonised system for measuring, collecting and reporting statistics on FDI.
Collection of data is complex. Government officials can tap into various sources of information to collect FDI data and information, for example, exchange control systems conducted by central banks, and any cross-border transactions collected by national bureau statistics. FDI information and statistic may also be collected from cross-border trade in services (mode 3 supply), greenfield FDI and cross-border mergers and acquisitions.
The African Trade Observatory (ATO) is designed to be a continental repository or one-stop-shop for FDI data and information, along with other trade related statistics. The ATO should contain information on FDI flows, national sectoral and industry information, bilateral FDI flows, FDI contribution to GDP and employment, investment treaties’ copies, signature and ratification status. Having a continental repository of FDI statistics would benefit local companies investing abroad or international companies investing in Africa to get information. It would also assist government officials and analysts to monitor FDI flows and evaluate the contribution of FDI to Africa’s development. FDI statistics and information is also used for other purposes by a broader array of stakeholders including government departments, investment promotion agencies, international and local companies, inter- and non-governmental organisations, and academic institutions.
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