Investment flows from Central and Eastern European countries into Africa : a case study of Nigeria

Abstract

The capacity of African countries to generate domestic savings is limited by continued poor economic performance hence substantial inflows of foreign capital (especially of the non debt-creating type) appear necessary for the effective implementation of their programmes of adjustment with growth. The inflows are needed to achieve "the level of new investment which clearly has to play a commanding role in the process of the restructuring of output patterns required to strengthen export supply and external balance." 2/ In recognition of this fact, the creation of an attractive climate for foreign direct investment has become an important element of the strategy for the restoration of the economies to the path of sustainable growth and for the diversification of their productive base. Efforts at attracting direct investment have been directed to all possible sources including non-traditional ones such as the countries of Central and Eastern Europe. Using Nigeria as a case study, this paper analyses investment flows from Central and Eastern Europe into Africa. Section I contains a review of the basic problems relating to such flows. Section II focuses on the current economic reforms in Central and Eastern Europe from the African perspective. The prospects and potentialities for the development of investment flows from Eastern Europe into Nigeria are examined in Section in. Section IV outlines the possible measures that may be taken by Nigeria to stimulate the inflow of foreign direct investment from Eastern Europe. The conclusion of the paper is presented in section V.