Question

What were the institutional reforms Africa adopted to increase FDI flows?

Answer 1

A number of African countries have implemented economic reforms to increase the role of the private sector, for example through the privatization of state-owned enterprises. We have also taken steps to restore and preserve macroeconomic stability by devaluing overvalued national currencies and lowering inflation rates and budget deficits

African countries have also strengthened their regulatory frameworks for FDI as part of these reforms, making them far more flexible, allowing for income repatriation and offering tax and other incentives to attract investment. In many nations, changes in the regulatory framework for FDI have been underpinned by the conclusion or accession to international agreements dealing with FDI issues. Most African countries have entered into bilateral investment treaties with other countries aimed at protecting and promoting FDI and clarifying the terms under which FDI between partner countries can take place. For example, by 1 January 1999 Egypt had signed 58 BITs

The conclusion of double taxation treaties (DTTs) in the 1990s has also been accelerated by African countries. DTTs can make investing in a country more attractive to foreign investors by helping them avoid paying duties on the same transaction twice. However, African DTTs are concentrated in a few countries such as Egypt, Mauritius, South Africa and Tunisia, the majority of which already have a long history of receiving significant amounts of FDI. Lastly, most African countries have signed multilateral agreements on the security of FDIs, such as the Multilateral Investment Guarantee Agency (MIGA) Convention and the Convention on the Settlement of Investment Disputes between States and nationals of other States