Africa 'must ease terms' for local businesses

The global economic slump makes it even more important for African governments to help local businesses by cutting red tape in areas like customs, tax and registration, a continental investment body said on Friday.

Omari Issa, head of the Investment Climate Facility (ICF) for Africa, told Reuters that creating a good operating environment for local firms also attracted foreign investors.

“Many African countries are expending large amounts of money, effort and time in often futile bids to attract foreign direct investment while paying little attention to the factors that not only create healthy economic environments at home, but automatically draw in foreign investors,” he said.

While many nations are striving to improve their business environments, Africa still lags behind other regions. According to the World Bank’s Doing Business 2009 report, 17 of the 20 most difficult places to conduct commerce are in Africa.

The ICF began work in 2007.

It helps African governments remove bottlenecks to business and economic growth, largely by helping improve infrastructure—for instance, modernising port clearance systems.

Issa said attracting foreign direct investment was a good thing, but that focusing on it at the expense of improving general investment conditions was counterproductive.

Since the ICF has been in existence, it has done 25 projects in 10 countries and with three regional blocs.

These include a three-year project in Rwanda to help establish commercial courts. Within 18 months, the central African nation had four new courts that slashed the number of pending cases, which had stood at 3 000.

ICF also helped Senegal develop software for pre-clearance of goods at its Dakar port.
That cut time spent navigating through customs, the bureau of standards and tax authorities among others, from several days to at most seven hours.

Issa said the facility had approved a second phase of the project aimed at reducing the time taken to remove cargo physically from the port.

“The second phase is focusing not only on Senegal but the entire region, so that they can offer the same services to the entire region,” he said in an interview.

Countries involved in the projects have to shoulder part of the costs, he said, but ICF and other donors sometimes chip in.

Other nations ICF has helped include Tanzania, Zambia, Sierra Leone, Mali and Burkina Faso and Lesotho and Liberia.

Countries were now seeking help for bigger projects.

“A year ago it was ‘Look we might be able to do five projects in a year.’ We did more. Now because we did more, people are saying ‘Why can’t you do even more?’”—Reuters

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