1. www.unido.org/afripanet Tokyo Conference May 2007 UNITED NATIONS INDUSTRIAL DEVELOPMENT ORGANIZATION FDI: Source of Sustainable Growth Africa Foreign Investors Survey 2005 2007 Africa Day Symposium Yoshiteru Uramoto Deputy to the Director General United Nations Industrial Development Organization

2. www.unido.org/afripanet Tokyo Conference May 2007 UNITED NATIONS INDUSTRIAL DEVELOPMENT ORGANIZATION Comparison with Macro level FDI statistics ▶ Survey results suggest that inward investment flows measured by the balance of payments (BoP) of UNCTAD and IMF may understate the actual level of FDI in Africa  The number of foreign affiliates identified by survey was in some cases larger than the population of subsidiaries of TNCs recorded in BoP statistics.  Enterprise level surveys capture smaller units  Some types of investment e.g. re-invested earnings only measurable in surveys

3. www.unido.org/afripanet Tokyo Conference May 2007 UNITED NATIONS INDUSTRIAL DEVELOPMENT ORGANIZATION UNIDO African Foreign Investor Surveys ▶ UNIDO has been working with African IPAs since 2000 to improve their capacity to stimulate growth through investment ▶ The surveys measure:  Impact of investment climate on investor perceptions and actions  Impact of investor actions on domestic economy ▶ The scope of the survey is expanding and will cover more than 30 countries

4. www.unido.org/afripanet Tokyo Conference May 2007 UNITED NATIONS INDUSTRIAL DEVELOPMENT ORGANIZATION ▶ In total 1216 companies participated ▶ The response rate was 35% (3484 companies received a questionnaire) Sample size and response rate

5. www.unido.org/afripanet Tokyo Conference May 2007 UNITED NATIONS INDUSTRIAL DEVELOPMENT ORGANIZATION Origin Organizational structure Market orientation Sub-sectors Share structure Age Growth Productivity Re-investment PERFORMANCEIMPACT INVESTOR GROUP Local content Employment growth Training Technology transfer INVESTOR PERCEPTION Importance and change of location factors IPA assessment  Measure investment according to investor groups  Measure Investment other than in extractive industries (especially in Africa)  Assess the relation between business environment and performance Data Analyses: Purpose of 2005 Survey

6. www.unido.org/afripanet Tokyo Conference May 2007 UNITED NATIONS INDUSTRIAL DEVELOPMENT ORGANIZATION Growing presence of entrepreneurs and South investors

7. www.unido.org/afripanet Tokyo Conference May 2007 UNITED NATIONS INDUSTRIAL DEVELOPMENT ORGANIZATION

8. www.unido.org/afripanet Tokyo Conference May 2007 UNITED NATIONS INDUSTRIAL DEVELOPMENT ORGANIZATION Sales and employment structure Sales Employment

9. www.unido.org/afripanet Tokyo Conference May 2007 UNITED NATIONS INDUSTRIAL DEVELOPMENT ORGANIZATION 9 Training expenditure per worker

10. www.unido.org/afripanet Tokyo Conference May 2007 UNITED NATIONS INDUSTRIAL DEVELOPMENT ORGANIZATION 10 Sales performance for sub-sectors

11. www.unido.org/afripanet Tokyo Conference May 2007 UNITED NATIONS INDUSTRIAL DEVELOPMENT ORGANIZATION 11 Local content Note: Only manufacturing firms

12. www.unido.org/afripanet Tokyo Conference May 2007 UNITED NATIONS INDUSTRIAL DEVELOPMENT ORGANIZATION 12 Local expenditures on material and subcontracting (as % of sales) Note: Only manufacturing firms

13. www.unido.org/afripanet Tokyo Conference May 2007 UNITED NATIONS INDUSTRIAL DEVELOPMENT ORGANIZATION 13 Home regions

14. www.unido.org/afripanet Tokyo Conference May 2007 UNITED NATIONS INDUSTRIAL DEVELOPMENT ORGANIZATION 14 Three-year performance evaluation

15. www.unido.org/afripanet Tokyo Conference May 2007 UNITED NATIONS INDUSTRIAL DEVELOPMENT ORGANIZATION Inter-Africa investment ▶ South African investors in sample:  Have the highest average investment levels of any source country  Are the most satisfied with the performance of their operations  Spend most per worker on training  Have highest sales growth expectations  Pay the highest wages ▶ Other African investors:  High expenditure on training per worker  High labor productivity  High skill intensity

16. www.unido.org/afripanet Tokyo Conference May 2007 UNITED NATIONS INDUSTRIAL DEVELOPMENT ORGANIZATION Key outcomes of the 2005 Survey ▶ Proportion of South-South FDI increasing over time; their perception, performance and decision making characteristics differ from North ▶ Individual investors (FEs) are an important element of FDI in SSA and require new investment promotion strategy  They need and want more investment assistance  Regarded as growth sector by equity funds  Many have regional market orientation ▶ Large differences between Francophone West Africa and Anglophone East Africa (structure, growth, age, etc. reflecting differing investment climate and response) ▶ Dichotomy of jobless growth versus employment generation with limited value creation.  Northern L-TNCs - stagnant employment but high share of skilled labour force  South S-TNCs – labour-intensive industries with fast growth but no human capacity development and low wages

17. www.unido.org/afripanet Tokyo Conference May 2007 UNITED NATIONS INDUSTRIAL DEVELOPMENT ORGANIZATION Future investment rate and volume Note: Over the next three years, normalized with 2004 total firm sales Note: MTN Nigeria was not considered

18. www.unido.org/afripanet Tokyo Conference May 2007 UNITED NATIONS INDUSTRIAL DEVELOPMENT ORGANIZATION 18 Expected future investment

19. www.unido.org/afripanet Tokyo Conference May 2007 UNITED NATIONS INDUSTRIAL DEVELOPMENT ORGANIZATION 19 Past and future investment volumes for different sub-sectors Past 3 yearsNext 3 years

20. www.unido.org/afripanet Tokyo Conference May 2007 UNITED NATIONS INDUSTRIAL DEVELOPMENT ORGANIZATION 20 INVESTOR PERCEPTIONS Intermediary Agencies Political will Political will INVESTMENT INVESTMENTCLIMATE PERFORMANCE PERFORMANCE IMPACT IMPACT Management of FDI-Local economy Growth Employment Investment Local supply chain Training Technology diffusion Export Output growth Investor satisfaction Productivity Market conditions Local resources Operational and regulatory impediments Priority issues to be addressed Investor support services Political will PolicyIntervention

21. www.unido.org/afripanet Tokyo Conference May 2007 UNITED NATIONS INDUSTRIAL DEVELOPMENT ORGANIZATION 21 Indicators Policy Strategy/services Measure policy impact Calibration Survey data Survey data Country Data Country Data Enterprise Diagnostic Data Enterprise Diagnostic Data Supplier Sub-contr. Data Supplier Sub-contr. Data Country (Gov. inst.) Civil society RECs & Development partners Financial Institutions Companies Investment opportunities Trends Suppliers/buyers partners Support services Growth areas Specific opportunities Technical assistance needs Transparency Online tools Other Data Sources Company Benchmark Training Analysis

22. www.unido.org/afripanet Tokyo Conference May 2007 UNITED NATIONS INDUSTRIAL DEVELOPMENT ORGANIZATION 22

23. www.unido.org/afripanet Tokyo Conference May 2007 UNITED NATIONS INDUSTRIAL DEVELOPMENT ORGANIZATION 23 Thank you. www.unido.org/afripanet Mr. Yoshiteru Uramoto Deputy to UNIDO Director General