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This paper examines the trend, constraints, promotion, and prospects of investment – domestic investment, foreign direct investment, and private portfolio investment – in Africa. After identifying the importance of investment in Africa's economic development, it was shown that all forms of investment are low in Africa and hence inadequate for the attainment of the MDGs and poverty reduction in the continent. The constraining factors include: low resources mobilization; high degree of uncertainty; poor governance, corruption, and low human capital development; unfavorable regulatory environment and poor infrastructure, small individual country sizes; high dependence on primary commodities exports and increased competition; poor image abroad; shortage of foreign exchange and the burden of huge domestic and external debt; and undeveloped capital markets, their high volatility, and home bias by foreign investors. The paper recommends that successful promotion of both domestic, foreign direct and portfolio investment in Africa will require actions and measures at the national, regional, and international levels. It concludes that the prospects are bright. New and attractive investment opportunities are emerging in infrastructure, particularly as most African countries now encourage public/private partnerships for investments in this sector. In addition to privatization, renewed interest within Africa in undertaking regionally based projects and joint exploitation of natural resources is creating other investment opportunities. Apart from the fact that investment in Africa yields the highest returns, investment risk in the continent is declining. In addition, much progress has been made in recent years to improve the investment climate in Africa. All this is of course is not to deny that obstacles do remain hence economic reforms to enhance domestic investment would need to be complemented by measures to attract increased foreign capital. Critical in such endeavors must be efforts to improve governance in some countries as well as to eliminate socio-political violence in others and development of domestic capital markets, while government institutions must be modernized and upgraded. [ABSTRACT FROM AUTHOR]

International institutions like the IMF and IBRD were created to oversee stability in international financial affairs, facilitate the expansion and balance of growth of international trade and reduce poverty in the poorest countries at risk of being left behind in economic development. The main aims of these two institutions were designed to avoid a repetition of the disastrous economic policies that contributed to the Great Depression of the 1930's. In the mid 1980's, the Fund's lending operations increased dramatically. The exigency of the debt crisis caused the Fund to devise programs for adjustment over longer periods. These are known as extended arrangements and with other medium term programs, can be arranged through the Structural Adjustment Facility or the Enhanced Structural Adjustment Facility. Among steps required by the IMF and IBRD to improve the health of the economy and foreign direct investment climate are an improved trade environment, economic reforms, private-sector encouragement and a better regulatory framework. The full implementation of these policies initially proved costly for some African countries and hence resulted in either partial implementation or total abandonment of the reform program.