FDI to Africa on continous rise

May 6, 2013
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The report combines an analysis of international investment into Africa over the past five years with a 2013 survey of over 500 global business leaders about their views on the potential of the African market/FILE
The report combines an analysis of international investment into Africa over the past five years with a 2013 survey of over 500 global business leaders about their views on the potential of the African market/FILE
NAIROBI, Kenya, May 6 – Africa’s share of global foreign direct investment (FDI) has grown to 5.6 percent over the past five years from 3.2 percent, highlighting the growing interest from foreign investors, according to Ernst & Young’s third Africa Attractiveness Survey released on Monday.

The report combines an analysis of international investment into Africa over the past five years with a 2013 survey of over 500 global business leaders about their views on the potential of the African market.

“A process of democratisation has taken root across much of the continent, ongoing improvements to the business environment and exponential growth in trade and investment,” Ernst & Young’s Managing Partner Mark Otty commented.

The outlook also appears positive, with the region as a whole expected to grow by four percent for 2013 and 4.6 percent for 2014.

A number of African economies are predicted to remain among the fastest growing in the world for the foreseeable future.

Eighty-six percent of those with an established presence on the continent believe that Africa’s attractiveness as a place to do business will continue to improve.

Those surveyed rank Africa as the second most attractive regional investment destination in the world after Asia.

On the other hand investment in FDI projects from developed markets fell by 20percent.

Although FDI projects from the UK grew by nine percent year-on-year, those from the US and France – the other two leading developed market investors in Africa – were considerably down.

In the period since 2007, the rate of FDI projects from emerging markets into Africa has grown at a healthy compound rate of over 21 percent.

In comparison investment from developed markets has grown at only eight percent.

The top contributors from the emerging markets are India, South Africa, the UAE, China, Kenya, Nigeria, Saudi Arabia and South Korea – all among the top 20 investors over that period.

Intra-African investment on the other hand, has been particularly impressive during the same period, growing at 33 percent compounded rate.

South Africa has been at the forefront of growth in intra-African trade and broader emerging market investment.

Kenya and Nigeria have also invested heavily but it is expected that others such as Angola, will become increasingly prominent investors across the continent over the next few years.

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