H. E. Ahmed Abdallah Mohamed Sambi, The President of Comoros,
H.E. Rupiah Banda, The President of Zambia,
H. E. Joseph Deiss, President of the GA,
Dr. Supachai Panitchpakdi, Secretary-General of UNCTAD,
Dr. Francis, Head of the International Chamber of Commerce and Industry,
Ladies and Gentlemen,
It gives me immense pleasure to address this special event on “A new partnership for LDCs’ development: Invest in the poor, for the poor and with the poor”. I would like to seize this opportunity to express my deep appreciation to UNCTAD, and the International Chamber of Commerce for organizing this important event, which addresses one of the vital development priorities identified by LDCs and their development partners.
The LDCs experienced increased economic growth under the Brussels Programme of Action. However this economic growth has not been accompanied by structural transformation and economic diversification. LDCs’ productive capacities remain weak due to lack of financial resources, poor infrastructure, and lack of technological innovation and adaptation, among others. Emerging multiple global challenges that include rising food and fuel prices, economic and financial crises and climate change have exacerbated the situation.
The key to sustained economic growth and poverty reduction in LDCs is the development of productive capacities and the concomitant expansion of productive employment opportunities. Foreign direct investment is crucial in this process, as it is a source of finance for investment in productive capacities and the principal means for acquiring technology and other intangible assets, production and marketing skills, enhance competitiveness and entrepreneurship, employment generation and poverty reduction and thus foster the structural transformation of LDCs’ economies. Foreign Direct Investment flows to LDCs increased significantly between 2000 and 2008, from $4.1 billion to $33.1 billion in 2008. However most of it was channelled to the extractive sector thereby minimising its impact on poverty reduction. As we prepare for the new decade, let me quickly highlight key areas that need to be addressed in order to ensure that FDI can help support LDCs to overcome their structural constraints, boost their productive capacity, generate sustained and inclusive growth and lead to poverty reduction.
Firstly, in this new decade FDI should be channelled to other fields besides the extractive sector including industry, agriculture, physical infrastructure especially energy, transport and communications and social infrastructure. This will increase the linkages between the benefits of the investments and the rest of the economy. I would also like to urge you to maximize the benefits of increased FDI on accelerated reduction of poverty, inequality and marginalization by targeting directly the employment of the poor, the vulnerable and women and aim to enhance their productivity.
Secondly, increased inflows of FDI depend on a variety of factors, including a favourable business climate in LDCs. I urge you to implement policies aimed at attracting foreign direct investment including establishing a stable economic, legal, and institutional framework, promoting a conducive macroeconomic environment, good governance, and democracy, and provision of investment guarantees, tax holidays, profit repatriation and liberalization of administrative procedures.
Thirdly, I wish to emphasize Governments of development partners should adopt and implement economic, financial and legal incentives to encourage their investors to bring their capital into LDCs, such as, investment and credit risk guarantees, co-financing, tax exemptions and information on investment opportunities in LDCs. I also urge developed countries to assist LDCs in their efforts to improve their investment climate by strengthening their capacity building and institutional mechanisms.
Lastly, the emerging economies are also now contributing to the increase in FDI flows to least developed countries. I call upon the emerging economies to adopt an investment preference regime that encourages their corporations to invest in LDCs.
In conclusion, I wish to call upon the UN system and the International Chamber of Commerce and other private and non-governmental and international organizations to support LDCs in mobilizing the much needed private investment, and in developing the relevant skills and capacity to be able to derive optimal development benefits from foreign direct investment.
I thank you all for your kind attention.