FDI inflows decline in 2008

FDI inflows decline in 2008
Written by Florence Bupe
Saturday, September 19, 2009 5:09:13 PM

ZAMBIA’S Foreign Direct Investment (FDI) inflows have registered a decline from US $1.3 billion in 2007 to about US $900 million in 2008.

Speaking during the release of the 2009 World Investment Report on Thursday, Zambia Development Agency (ZDA) investment promotion director Florence Mumba said the decline in FDI was mainly as a result of the global economic meltdown.

“The worldwide economic crisis has greatly affected investment inflows into developing countries, Zambia inclusive. We also continue to face a challenge in infrastructure development, a factor which has also affected the flow of investments into the country,” Mumba said.

“However, in percentage terms, developing economies fared better than developed countries, with inflows standing at 43 per cent.”

This year’s report is focused on agriculture, under the theme “Transnational Corporations, Agricultural Production and Development”.

Mumba observed that Zambia’s FDI performance indicators had continued to be strongly based on the mining industry, and said there was need for the country to enhance the performance of the agriculture sector as an economic driver.

“We hope there will be an improvement in the agriculture sector in terms of attracting FDI, once infrastructure is improved. In order to address the current economic challenges, developing countries need to strategise their agricultural production,” she said.

Mumba also stressed the need for developing countries in general, and Zambia in particular, to build value chains for enhanced economic benefits.

And according to the World Investment Report, global FDI inflows were expected to decline from US $1.7 trillion in 2008 to below US $1.2 trillion by the close of this year.

Recovery is expected to be slow in 2010, reaching no more than US $1.4 trillion, but gathering momentum in 2011 to approach US $1.8 trillion.

“As a result of the worsening financial and economic crisis in 2008, prospects for global foreign direct investment remain gloomy. The crisis has changed the FDI landscape, with a surge in the developing and transition economies’ share in global FDI flows to 43 per cent in 2008. This change in the pattern of inflows is partly due to the large decline in FDI to developed countries,” stated the report.