Bringing Costa Rica’s formula for investment promotion to Eastern Africa

26 June 2018
ITC News

The challenge

Most countries have public, semi-public or private agencies dedicated to promoting trade and attracting foreign investment. When they perform well, they are a critical bridge between government and the private sector, helping their business clients overcome information asymmetries, share risks and access government services.

In many developing countries, notably in Africa, investment promotion agencies face daunting challenges. The policy and business environment for investment are often unclear. A country’s brand may not distinguish it from regional competitors. Investment incentives may be inappropriately targeted. In these places investment promotion agencies frequently lack strong connections to local economic players, even though such linkages are essential for foreign direct investment to lift productivity and deliver sustained benefits.

On the operational front, investment promotion agencies with limited resources may struggle to hire, train and retain good personnel and to develop a reputation for reliability. They tend to be marked by fractured, intermittent service to clients, with weak or absent mechanisms for record-keeping, information-sharing and institutional learning. Such institutions can struggle to offer cohesive solutions to prospective investors or provide aftercare to support existing investors. Suboptimal managerial systems can mean such agencies do not measure their performance accurately, making it hard for them to demonstrate and improve results.

While it is possible for investment agencies to learn from top performers elsewhere, they typically lack the resources and access to role models needed to emulate best practices.

The response

As part of a broader project to foster greater trade and investment between China and Africa, ITC is working to support investment promotion agencies in Ethiopia, Kenya, Mozambique and Zambia to improve their capacity to attract and sustain foreign direct investment. ITC decided to connect the African organizations to a role model – a top-performing agency from Costa Rica.

Coalición Costarricense de Iniciativas de Desarrollo (CINDE), the Costa Rican investment promotion agency, has won several awards for its services, results and corporate culture. Its excellence was confirmed by an ITC benchmarking assessment specially adapted to gauge the capabilities of investment promotion agencies. The August 2017 assessment took stock of CINDE’s managerial, governance and service delivery capacities and provided focused recommendations for improvement. Despite its boutique size, limited resources and large regional competitors, CINDE delivers exceptional results with a focus on customer service; interagency cooperation; and a determined approach to results measurement and continuous improvement. CINDE’s ‘magic formula’ relies on smart use of online platforms, social media and existing information sources. Innovation is core to its culture: ideas, rather than money, generate results. This approach has strong relevance for African agencies.

‘This collaboration is very exciting for us because it builds on that growth process. In teaching and sharing we are learning about new perspectives, new cultures and creative ways to face challenges.’ Jorge Sequeira, Managing Director, CINDE

 With input from CINDE, ITC created a new tool to assess the four African investment promotion agencies across the full investment promotion lifecycle, taking into account their limited resources and the complex political environments in which they operate. Each assessment provided a baseline of current practices and identified areas for improvement.

In light of the array of technical skills and knowledge needed to conduct the assessments, ITC asked CINDE – whose leadership team was interested in supporting institutional capacity building in Africa – to be its partner. Through this triangular cooperation, CINDE officials helped ITC design and deliver training workshops; provided peer-to-peer mentoring and coaching; and worked with their African counterparts to prepare performance improvement plans. ITC used the Dubai conference of the World Association of Investment Promotion Agencies (WAIPA) in November to arrange a problem-solving workshop for African CEOs and CINDE’s managing director, Jorge Sequeira.

‘Continuous improvement is an element which we work hard to make part of our corporate DNA and which helps us to aim for excellence,’ Sequeira said. ‘This collaboration is very exciting for us because it builds on that growth process. In teaching and sharing we are learning about new perspectives, new cultures and creative ways to face challenges.’

The results

This initiative, while still in its early stages, has already produced new tools and modes of collaboration, contributing to ITC’s continuous efforts to innovate and refine its service delivery to clients.

The process of benchmarking CINDE served as a pilot to refine good practice indicators for investment rather than trade promotion, such as institutional ability to foster links to local suppliers or simplify inward investment processes. This in turn yielded dividends when carrying out assessments of the African agencies and will inform monitoring throughout their reform processes.

Roadmaps for improvement have been put in place for the four African agencies, drawing on practices tried and tested in Costa Rica. Common themes include implementing processes and behaviours to develop a strong customer focus; improving presentation to potential investors; and learning how to respond to specific needs of investors in the target market, including understanding its business culture. Developing a better basis for measurement will be a continuing underlying theme.

Involving counterparts from other countries to share practices has been shown to be an effective way of bringing knowledge, empathy and credibility to the conversation within African investment promotion agencies. For ITC, working with one TISI to deliver impact for another tested new models of procurement and engagement with partner institutions.

The future

ITC’s engagement with CINDE will continue in 2018, with targeted workshops and advisory services addressing areas for improvement identified in each of the African agencies.
ITC plans to replicate this partnership model in other countries working to attract investment to promote sustainable growth.