How to increase investment in the Middle East and North Africa
This post was initially published in the Private Sector Development Blog on February 4, 2013 and was co-authored by Robert Whyte and Carlos Griffin.
In light of recent political and social unrest in the region, foreign investors are taking a “wait-and-see” attitude to projects in the Middle East and North Africa. For the region’s investment promoters, this demands better, more proactive performance than in the past. Fortunately, although much remains to be done, the investment agencies of the 19 MENA governments are, as a group, off to a good start, according to a World Bank Group report released on [February 4, 2013].
Global Investment Promotion Best Practices 2012: Seizing the Potential for Better Investment Facilitation in the MENA Region reports on the ability of investment-promoting institutions (IPIs) in 189 countries to handle investor inquiries and provide investors with quality business information through their Web sites. It shows that the MENA region was the only one in the world to achieve significant improvement since the last edition of GIPB in 2009, with the IPIs of Morocco and Yemen among the world's three most improved.
However, this masks a low starting point and considerable room for further improvement. In 2009, investment facilitation by MENA IPIs lagged behind all other regions except Sub-Saharan Africa. In 2012, the region’s IPIs placed in the middle globally but remained far behind the leading group, the IPIs of OECD high-income countries.
This worrisome gap is almost completely due to persistently poor handling of investor inquiries. Of the 38 inquiries submitted to 19 MENA IPIs as part of the survey, 25 went unanswered. While this is an improvement from the 32 that were ignored in GIPB 2009, it reflects a continued indifference to investors that are actually knocking at countries' doors. In these difficult times, those are needlessly squandered opportunities that no IPI can afford.
Recent investor surveys show that the weight given to political risk in their investment decision-making has increased significantly post-recession. Even though other surveys show increased optimism about the MENA region–with its market of nearly 400 million consumers–investors are unlikely to move in substantial numbers until the risks can be adequately understood and/or mitigated.
The clearest ways for the region’s IPIs to contribute is to continue improving their proactive provision of quality business information and, especially, to adopt procedures and systems that will allow every valid investor inquiry to be well answered. CEOs and senior managers from the region's IPIs will meet today to discuss the report's lessons and to learn from each other's experiences at a conference organized around the report's launch in Muscat, Oman.