afrol News, 23 October - Foreign Direct Investment (FDI) into Africa has doubled between 2004 and 2006 to a record of US$36 billion, spurred by the search for primary resources and increased profits.

The rising demand, especially from Asia, for oil, gas, and metals has led to an investment boom in mineral exploration and extraction, contributing largely for the increases in foreign direct investment (FDI) in many mineral-rich countries in Africa.

This was contained in the UNCTAD World Investment Report 2007: Transnational Corporations, Extractive Industries and Development report launched in the Ghanaian capital Accra.

The search for new resource reserves led to increase FDI inflows to Africa’s least developed countries to the tune of $8 billion, after a two-year decline with Burundi, Djibouti, Guinea-Bissau, Somalia, Madagascar, Ethiopia, Cape Verde, The Gambia and Sudan, where FDI inflows for new oil exploration and mining activities as well as in the services sector increased.

The report notes that despite the huge inflows, Africa still lags behind other regions. “Indeed, the region’s share of the global FDI fell to 2.7% in 2006 from 3.1% in 2005,” said Olle Ostensson, UNCTAD Representative in Ghana.

The report argues that commodity boom should provide opportunities for development and poverty alleviation in mineral-exporting countries. But considerable efforts to address economic, environmental, social, and political issues relating to mineral extraction are necessary for harnessing the earnings from extractive industries to boost development.

The quality of governance, specific government policies and institutions of the host country are critical in ensuring sustainable development gains from resource extraction, with or without transnational torporations' involvement, the report recommends.

“Governments need a clear vision and strategy to ensure that oil and other mineral resources are used in a transparent and equitable manner to contribute to sustainable development. They also need to strengthen their abilities and capacities for designing and implementing appropriate policies."

By S. Makalo in Accra, Ghana

© afrol News

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