NAIROBI, Kenya, Oct 1 – An economic insight report by The Institute of Chartered Accountants in England and Wales (ICAEW) reveals that East Africa has the lowest level of African Foreign Direct Investment (FDI)) inflows when compared to West Africa and Southern Africa.
The East African region’s inflow stands at Sh709.9 billion while its share grew at a rate of 11 percent between 2013 and 2014. According to the report, the growth is attributed to efforts for closer regional integration in the East African Community (EAC), which has involved harmonizing investment regulations across the region and reducing red tape.
Regardless of the region’s general score, Nairobi however still leads the list as Africa’s most attractive destination for FDI.
According to the report, this is predominantly motivated by the fast-growing middle class that is setting the stage for a booming consumer market.
“In addition to a growing entertainment and media industry, Kenya is also emerging as a global leader in the financial services sector thanks to mobile money systems such as MPESA,” said Michael Armstrong, Regional Director, ICAEW Middle East, Africa and South Asia.
The report also says that Kenya remains the star performer in East Africa with GDP growth close to 6.5 percent in the next three years.
Africa as a whole has positioned as a major business opportunity for overseas investors. According to the report and estimates from World Bank, the total level of external financial inflows into Africa has increased from Sh4.2 trillion in 2000 to Sh19.9 trillion in 2013.
This has been attributed to the inward FDI from China with investment mainly going into primary resource sectors and infrastructure.
According to Armstrong, China’s force on working with Africa through direct investment and trade over Europe’s focus on official aid has been the game changer.
“European countries are now rethinking their strategy of connecting with the continent because of this,” he added.
The investment trend in Africa is therefore expected to continue as a number of projects expected to bolster growth.