Investment Facilitation Takes Center Stage in Competitive Global FDI Landscape

 Story by Ayubu John photo journalist Afrimedia Group news

As global competition for Foreign Direct Investment (FDI) intensifies, policymakers and investment experts are increasingly shifting focus from traditional promotion strategies to comprehensive investment facilitation frameworks.

Speaking during a high-level policy dialogue, Ravini Gunasekera, Associate Programme Officer in the Division of Market Development, emphasized that attracting FDI has become more complex in a highly concentrated and competitive global investment environment.

“Regulatory frameworks across countries are becoming more aligned. What now differentiates economies is not merely incentives, but the efficiency, transparency, and predictability of their investment processes,” she noted.

Investment and Sustainable Development

Gunasekera underscored that investment does not automatically translate into sustainable development. Its developmental impact depends on several critical variables:

The type of investment

The profile and motives of the investor

The mode of entry — whether greenfield, brownfield, or joint venture

The strength and quality of the host country’s regulatory framework

“These factors determine whether investment contributes meaningfully to long-term economic transformation,” she explained.

What Investors Are Really Looking For

The discussion reframed the conversation from challenges to investor expectations. Research consistently identifies two primary determinants influencing investment decisions: specificity and predictability — factors that often outweigh even market size.

Investors want clarity on procedures, timelines, compliance requirements, and regulatory obligations. They seek streamlined administrative processes and assurance that institutions function efficiently and consistently.

Investment facilitation directly addresses these concerns by removing ground-level bottlenecks, enhancing transparency, strengthening inter-agency coordination, and fostering regulatory coherence.

Importantly, Gunasekera stressed that facilitation is not solely about attracting new investment. “Its core objective is also investment retention and expansion,” she said, noting that sustaining and growing existing investments is equally critical to economic development.

Multi-Level Investment Governance

Investment facilitation operates across multiple governance layers:

Domestic frameworks form the foundation, covering property rights, taxation, labor regulations, and business registration systems.

Bilateral Investment Treaties (BITs), while numerous, traditionally focus on protection and promotion rather than facilitation. However, emerging bilateral arrangements are increasingly integrating sustainable investment principles.

Regional frameworks, such as the COMESA Common Investment Area, provide guidance to partner states in strengthening national investment codes and investor protection standards.

The WTO Investment Facilitation for Development Agreement

A significant milestone in global investment governance is the Investment Facilitation for Development (IFD) Agreement under the World Trade Organization.

Concluded under a Joint Initiative involving nearly three-quarters of WTO members — including 32 African Union states — the IFD Agreement represents a major step toward harmonizing global investment facilitation standards.

The agreement aims to:

Improve transparency of investment-related measures

Streamline administrative procedures

Promote regulatory cooperation

Support sustainable development objectives

Notably, the IFD applies across the entire investment lifecycle — from establishment and acquisition to expansion, operation, management, and eventual disposal — and extends to technical, regional, and local government levels.

Core elements include the publication of up-to-date laws, creation of single information portals, reduction of bureaucratic red tape, establishment of focal points for investor support, and provisions promoting responsible business conduct, anti-corruption, and integrity standards.

The agreement also incorporates Special and Differential Treatment (SDT), enabling developing countries and least developed countries to implement obligations at their own pace while receiving technical assistance and capacity-building support.

A New Frontier of Competitiveness

The panel concluded that in an era where regulatory regimes are increasingly similar, investment facilitation has become the new frontier of competitiveness.

The focus must move beyond attracting investment to retaining existing investors, expanding established operations, and ensuring that investment delivers tangible, sustainable development outcomes.

Through stronger domestic reforms and active participation in regional and multilateral frameworks — particularly under the WTO — countries can build more transparent, predictable, and development-oriented investment climates capable of thriving in today’s competitive FDI landscape.