On 30 September 2009, the FPC CBP formally reached the end of its third phase. But this does not mean that support to countries in this area will end. In light of demand from their member states, partners BCEAO/BEAC, CEMLA and WAIFEM have indicated that they are keen to continue working in partnership with DFI and one another on these issues, and are in discussions with donors about potential funding. MEFMI has also indicated that this area of work will continue to be a priority in its current phase. Seco has indicated that it will fund continued work in 1-2 regions, led by regional organisations, and launched its Review of the FPC 3 Review in November, to report findings in April 2010. In the meantime DFI and partners are compiling the final report to Seco on phase 3 progress. For more details of the achievements of the FPC CBP, and the future plans for each region, please read Newsletter 40.
In the meantime, pending the new financing, we have launched a new DFI Group website in Q4. Pages devoted to FPC matters have been enhanced to encompass areas such as Trends, Investment Climate, Financial Crisis, CSR, Legal and Institutional issues, Monitoring, Analysis and Policy. Materials on the old FPC CBP website are still accessible, but any update will from now on be featured on the new site, which will be further developed in conjunction with regional partners.
KEY TO MISSIONS WITHIN A “CYCLE” (Survey or Census): DAM = Demand Assessment Mission / OAT = Opening Awareness and Training Workshop / FUM = Follow Up Mission / CDW = Closing Results Dissemination Workshop.
Country
Cycle
Developments
Benin
1
Finalised its analytical report and is aiming to hold a Closing and Dissemination Workshop in Q1
Bolivia
3
Quarterly surveys and data dissemination are ongoing
Burkina Faso
2
Completed its analysis and will be disseminating results in Q1
Cameroon
2
Finalised its report and is working towards holding a FUM and CDW in Q4
CAR
1
Will be launching their survey in Q1
Chad
1
Will be launching their survey in Q1
Congo
1
Will be launching their survey in Q1
Cote d’Ivoire
1
Finalised the final version of its analytical report and is working towards disseminating results in Q1
Gabon
1
Is expected to host a training event in Q1
The Gambia
3/4
Disseminated Cycle 3 results in Q4 2009, and seeking assistance for next cycle
Ghana
3
Disseminated Cycle 2 (survey) results, and is presently implementing a census
Guinea Bissau
1
Held a Follow up Mission in October and is now working on the its analytical report
Guinea Equat.
1
Received a Demand Assessment Mission in June and is aiming to host an Opening Awareness and Training Workshop in Q1
Malawi
4
Achieved an impressive 96% response to its survey. Data editing, checking and entry is in progress, and dissemination of results is scheduled for Q1
Mali
1
Is analyzing its survey results and scheduling a Closing and Dissemination Workshop in Q1
Nicaragua
3
Hosted an extended FUM in Q4 and addressing private sector external debt
Niger
1
is working on the first draft of its analytical report with a view to disseminate results in Q1
Senegal
1
Is now finalising its analytical report and will hold a Closing and Dissemination Workshop in Q1
Tanzania
6
Has attained a healthy response rate of 91.5% (of 400 enterprises), and is expected to disseminate results during Q1 after incorporating those from Zanzibar
Togo
1
Finalised its data collection in April and obtained a 65% response rate. A Follow Up Mission was held in June and a Closing and Dissemination Workshop is planned for Q1
Uganda
7/8
Disseminated Cycle 7 results and launched Cycle 8 in Q2 2009. Current response rate is 93.7% and dissemination of preliminary results is scheduled for Q1
Zambia
2/3
Published its Cycle 2 analytical report. It is preparing towards Cycle 3, and agencies formalised their cooperation in a Memorandum of Understanding in Q1
Methodology, Software and Information Products
The analytical publication, Private Capital Flows to Low Income Countries: Dealing with Boom and Bust, was completed in Q4, and is in the final stages of production. It will be available in English, French, Spanish, and Portuguese, and will be disseminated and uploaded on the website during Q1. Synthesising data and analysis from FPC CBP participating countries and other sources, it will include chapters on: 1) Regional trends and the impact of the global financial and economic crisis; 2) FPC scale and composition of financing (stocks and flows by instrument); 3) FPC composition by sector, source country and recipient region; 4) dynamic sectors and the global recession (case studies on mining in Tanzania, manufacturing in Nicaragua, real estate and tourism in The Gambia, and telecommunications in Uganda); 5) What drives investment (investor perceptions, intentions, and responsibility); 6) Monitoring foreign private capital (lessons from current practice, and future needs in moving to rapid response and early warning systems); and 6) Conclusions and recommendations.
The technical publication Monitoring and Analysing Foreign Investment: How to Build Sustainable Institutions has now been translated into Portuguese and will be disseminated and uploaded to the website during Q1.
Newsletter 40 will be disseminated and uploaded on the website during Q1. It will include articles on the achievements of the FPC CBP, analytical findings from The Gambia (Cycle 3), and Ghana (Cycle 2), and a description of the new DFI Group website (see below). Newsletter 39 has been disseminated and uploaded. Articles address the impact of the global financial crisis in Latin America and presents analytical findings from Zambia (Cycle 2).
The FPC CBP genericsoftware (V2.1), User Manual, and Technical Manual are available for registered users to download.
with any enquiries
This paper summarises the counter-cyclical responses by African countries to the crisis, and suggest steps to reduce the pro-cyclical nature of macroeconomic frameworks. This would also involve addressing domestic banking regulations that tend to exacerbate the pro-cyclicality of capital flows and bank lending, and amplify the impact of exogenous shocks. In the longer term, countries could restore high growth by enhancing competition in the financial sector, streamlining labour market regulations, developing financial markets, strengthening governance, promoting private sector development and enhancing economic diversification. These reforms would need to be accompanied by measures to establish social safety nets for the most vulnerable in society. Capital Flows and Capital Account Liberalisation in the Post-Financial-Crisis Era (AfDB)
This paper highlights the transmission of the financial crisis to households, companies, banks, capital markets, and government via the collapse in exchange rates and stock prices, resulting in a surge in capital outflows including capital flight.
The crisis seems to be distorting the pattern and predictability of capital flows, and poses a threat to debt sustainability. The flexibility of individual African countries to manoeuvre out of the crisis will very much depend on financial sector reforms, especially relaxation of controls on portfolio investment and FDI, and capital account liberalisation.
In the wake of the crisis, this article identifies numerous new opportunities for private and international investors in Africa’s energy sector. These may be exploited by increasing private sector participation in power-related infrastructure, addressing weak regulatory frameworks, expensive credit, underdeveloped capital markets and a lack of innovative risk-mitigation instruments, and keeping markets open to international investment. Regional Economic Outlook October 2009: Africa (IMF)
This edition expects the crisis to add 10 million people to the number living below USD 1.25 a day during 2009-10, with adverse effects on child health and mortality in particular, as a result of the spike in portfolio outflows, the slowdown in FDI, declining commodity prices and export demand. The banking sector has also come under increased strain, as declining profits and incomes challenge the ability of enterprises and individuals to service their debts, necessitating closer monitoring. It finds the impact to have been greatest for oil exporters (due to declining output growth), then MICs, and finally LICs and fragile states. Looking ahead, fiscal policy must balance support for the recovery with enhancing future growth prospects, debt sustainability, and poverty reduction. Latin American Economic Outlook 2010 (OECD)
This report argues that contrary to prevailing wisdom, Latin American countries that opened their markets to international competition during the last decade have not been more vulnerable to the global economic downturn. It highlights the positive role migration and remittances are expected to play in recovering from the crisis.
top Regional Economic Outlook October 2009: Western Hemisphere (IMF)
This edition argues that while the worst is over for most countries, recovery is lagging in countries dependent on tourism (hit hard especially in the Caribbean, with negative prospects set to continue into 2010); and remittances which continue to decline (especially affecting commodity importing countries in Central America). By instrument, large portfolio outflows have reversed for larger countries. In some countries, the private sector drew down their foreign assets to smooth the reversal in inflows. FDI inflows have been more stable, but projected to decline significantly, and remain below pre-crisis levels for some time. The pullback of global banks has been reversed, and relative stability relates to the fact that most loans and other claims by global banks had been disbursed by their local affiliates, and financed with local deposits.
Crisis Response: Sectors
The Global Economic Crisis and African Manufacturing (AfDB)
This paper argues that while most of Africa’s manufacturing sectors will not be significantly affected, the lack of industrial and export diversity constrain growth. The recession, however, may represent an opportunity fo r industrial dynamism in Africa, as costs continue to rise in China, with task-based production moving away from South East Asia, while domestic stimuli in Asia may reorient production away from global markets. This can be exploited if problems that have constrained industrial development in the past are solved. These include the acceleration of reforms to improve the investment climate – especially in such key areas as infrastructure, spatial industrial policy, trade logistics, and regional integration.
Crisis Response: Monitoring
Coordinating a Global Statistical Response (UNSD / DESA)
In the wake of the crisis, UNSD / DESA are calling for coordinated efforts to identify and remedy data gaps, improve dissemination, and develop early warning efforts for more timely policy response. Main challenges include the financial information of especially non-financial corporations and households. These issues are being addressed by the Inter-Agency Group on Economic and Financial Statistics. The UN is proposing a data template for economic and financial statistics, covering national accounts, production and turnover, prices, labour market, external sector, financial sector, government, non-financial and household sector, financial and real estate markets, and economic sentiment and composite indicators. Investment Policy Monitor (UNCTAD)
In response to the crisis, UNCTAD has published the first in a series of periodic reports, to provide policy-makers and the international investment community with up-to-date information about the latest developments in FDI policies at national and international levels, and identify the overall trends and salient features of these developments. It responds to the call by the G20 for quarterly reporting on G20 members’ adherence to their pledge not to raise barriers to trade and investment. The report distinguishes between investment-specific policy measures, investment-related policy measures, and international investment rule-making
OECD International Direct Investment Statistics 2009
This CD-ROM contains the latest available data on international direct investment flows (inflows and outflows) and direct investment positions (inward and outward) of OECD countries. The Role of International Investment Agreements in Attracting FDI to Developing Countries (UNCTAD)
This paper reviews various studies that explore the impact of International Investment Agreements (IIA) on investment inflows, looking at bilateral investment treaties (BIT), and broader economic cooperation agreements. It concludes that IIAs can influence a company´s decision where to invest, and this impact is generally stronger in the case of preferential trade and investment agreements than with regard to BITs. However, while IIAs need to be embedded in broader FDI policies, they alone cannot do the job, and do not, for example, contain clear commitments by capital-exporting countries.
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