facilitate the generation, sharing and management of trustworthy data and information that is usually required by investors and aid organizations to make wellinformed funding decisions (United Nations Economic Commission for Africa
2010). This information should, to the extent possible, be generated and managed
by independent institutions to avoid the corruption that is prevalent in many African
countries, as a means of enhancing the transparency required by donors and investors (Chap. 1 Vol. 1). Second, as discussed accessible and reliable infrastructure
(e.g. roads, ports, energy systems, ICT) can facilitate the implementation of projects
financed through FDIs and ODA. Thus, the development of such critical infrastructure should become a priority policy domain in those countries seeking to absorb
effectively FDIs and ODA (Chap. 1 Vol. 1). For example, Rwanda (a country with
scarce natural resources) has invested heavily in ICT infrastructure to improve
connectivity,
6 skills and institutional frameworks, partly through its Vision 2020
project to enhance investment flows. This has helped the country make impressive
strides towards transitioning to a knowledge-based economy (Ntale et al. 2013).
Third, policies should promote education-related actions for developing a qualified
skill force to support value-addition in products/services, and more broadly to
transition to knowledge-based economies (Asiedu 2002). The above would have
ripple positive outcomes for multiple SDGs such as SDG3 (good health and wellbeing), SDG4 (quality education), SDG7 (affordable and clean energy) and SDG16
(peace, justice and strong institutions).
Although putting incentives may help attract to some degree FDIs and ODA, it is
robust regulatory frameworks and policies that sit the core of a country’s ability to
receive and appropriately use such funds. Thus, any effort seeking to develop strong
institutions and regulations to support FDIs and ODA should go beyond creating
purely economic incentives. Instead, there should be a concerted effort to develop
integrated policy frameworks to support good governance in other relevant policy
domains such as the labour market, biodiversity conservation, landscape management, research and development, conflict resolution and infrastructure development,
among others (Clark et al. 2018) (Chap. 1 Vol. 1). At the same time, the security of
FDIs should be guaranteed through long-term economic policies that seek to ensure
the stability of the local currencies (and the broader economic environment), and
functional judicial systems that can enforce business contracts. Even though FDIs
are critical for the viability of large investments in African countries that lack
substantial domestic resources, there should be concomitant efforts to mobilize
local financial resources for small and medium enterprises (SMEs), as well as
support the financial inclusion of local communities. Institutional investments and
local banks would be critical in making financial resources available to SMEs by
granting them access to affordable credit (Chirambo 2016). The financial inclusion
of local businesses (and the broader communities) may help boost economic growth
6 Connectivity improves service delivery for businesses, and the broader agriculture and health
sectors. For example, it facilitates diverse processes such as telemedicine, cashless mobile banking,
money transfers and remittances, and financial inclusion (Allen 2017).
5 Determinants of Foreign Investment and International Aid for Meeting the. . .
181
2010). This information should, to the extent possible, be generated and managed
by independent institutions to avoid the corruption that is prevalent in many African
countries, as a means of enhancing the transparency required by donors and investors (Chap. 1 Vol. 1). Second, as discussed accessible and reliable infrastructure
(e.g. roads, ports, energy systems, ICT) can facilitate the implementation of projects
financed through FDIs and ODA. Thus, the development of such critical infrastructure should become a priority policy domain in those countries seeking to absorb
effectively FDIs and ODA (Chap. 1 Vol. 1). For example, Rwanda (a country with
scarce natural resources) has invested heavily in ICT infrastructure to improve
connectivity,
6 skills and institutional frameworks, partly through its Vision 2020
project to enhance investment flows. This has helped the country make impressive
strides towards transitioning to a knowledge-based economy (Ntale et al. 2013).
Third, policies should promote education-related actions for developing a qualified
skill force to support value-addition in products/services, and more broadly to
transition to knowledge-based economies (Asiedu 2002). The above would have
ripple positive outcomes for multiple SDGs such as SDG3 (good health and wellbeing), SDG4 (quality education), SDG7 (affordable and clean energy) and SDG16
(peace, justice and strong institutions).
Although putting incentives may help attract to some degree FDIs and ODA, it is
robust regulatory frameworks and policies that sit the core of a country’s ability to
receive and appropriately use such funds. Thus, any effort seeking to develop strong
institutions and regulations to support FDIs and ODA should go beyond creating
purely economic incentives. Instead, there should be a concerted effort to develop
integrated policy frameworks to support good governance in other relevant policy
domains such as the labour market, biodiversity conservation, landscape management, research and development, conflict resolution and infrastructure development,
among others (Clark et al. 2018) (Chap. 1 Vol. 1). At the same time, the security of
FDIs should be guaranteed through long-term economic policies that seek to ensure
the stability of the local currencies (and the broader economic environment), and
functional judicial systems that can enforce business contracts. Even though FDIs
are critical for the viability of large investments in African countries that lack
substantial domestic resources, there should be concomitant efforts to mobilize
local financial resources for small and medium enterprises (SMEs), as well as
support the financial inclusion of local communities. Institutional investments and
local banks would be critical in making financial resources available to SMEs by
granting them access to affordable credit (Chirambo 2016). The financial inclusion
of local businesses (and the broader communities) may help boost economic growth
6 Connectivity improves service delivery for businesses, and the broader agriculture and health
sectors. For example, it facilitates diverse processes such as telemedicine, cashless mobile banking,
money transfers and remittances, and financial inclusion (Allen 2017).
5 Determinants of Foreign Investment and International Aid for Meeting the. . .
181