The degree to which a country in Africa and elsewhere practices good governance and embraces transparency is a greater determinant of investment from European Union (EU) States than the actual cost of the investment itself, EU ambassador to South Africa Roeland van de Geer said.

“Governance, the political will and the political climate is incredibly important, and there is an increased interest in investing outside the EU in countries that are transparent and open. Money will go where it’s welcome,” he noted during a panel discussion at the EY Strategic Growth Forum Africa 2014, on Wednesday.

US ambassador to South Africa Patrick Gaspard added that a combination of good governance and effective regulation in any State culminated in the “perfect storm” for attracting investment.

In terms of high-level development cooperation, international partners tended to make partnership decisions based on the governance of its potential economic ally.

However, African countries were still lacking in this regard.

“There is quite a ways to go in terms of governance and transparency on the continent, and reforms that are applied in one sector of the economy should be cross pollinated in other areas and regions,” Gaspard commented.

Somewhat more bullish, Van de Geer believed there had been “big” improvements in governance across Africa and, while acknowledging that there remained challenges, he emphasised that these were not unique.

“I’m not being naïve, but, on the whole, there has been a steady improvement across the continent,” Van de Geer said.

The diplomats agreed, however, that corruption remained an inherent problem, retarding growth and development and deterring risk-adverse investors, which Gaspard believed could be somewhat countered by a robust, well-informed, critical business media and ethical business community.

Despite Africa’s governance shortfalls, Van de Geer expected continued high levels of investment from the EU into Africa.

“We have never seen a higher level of interest in Africa from clients in the US and the EU,” added EY Global vice-chair of tax Jay Nibbe.

Gaspard, meanwhile, reiterated the US’s commitment to South Africa as a trade partner, but cautioned that the local regulatory environment needed to be an enabler.

“US President Barack Obama is clear about the desire to have South Africa as a participant in the African Growth and Opportunity Act, but wants to ensure that the 600 US businesses in South Africa have a level playing field and enjoy the benefits that the EU enjoys under its trade agreement with South Africa,” he said, alluding to South Africa and the EU’s Trade, Development and Cooperation Agreement.

This agreement established a free trade area that covered 90% of bilateral trade between the two parties.