These promotional efforts are not cheap and are not easy. An effective approach, says Wells, would be for several countries to pool their resources to publicize their attractions and to develop common investment policies. They should also learn strategies to avoid, such as reliance on tax incentives and general investment missions, which are usually ineffective, he says. Experience suggests that economic reform alone will not attract foreign investors to Africa. Successful investment promotion can be expensive and must be carefully targeted to be effective.
Some caution is in order.
The prospects for large amounts of foreign investment flowing into Africa are frequently oversold. Africa's share of total developing world investment has been declining for some years. The exceptions may be the countries with mineral or other natural resources. On the other hand, the benefits of the foreign investment that does come may be disproportional to what is implied by the overall figures. For example, foreign investment in export manufacturing can encourage local firms to export, and foreign management can increase the efficiency of formerly state-run enterprises.