FDI value jumps despite falling number of investment projects in Africa - EY’s 2015 Africa attractiveness survey
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Wednesday, June 3, 2015
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danielmjema.blogspot.com
JOHANNESBURG, South-Africa, June 2, 2015/ -- According to EY’s 2015 Africa attractiveness survey – Making choices (http://www.ey.com/za),
Africa’s share of foreign direct investment (FDI) projects fell 8.4% in
2014, but remained well above pre-2008 levels. However, foreign direct
capital investment into the continent surged to US$128b, up 136% in 2014
– a five-year high, with the number of jobs created from FDI jumping
68% resulting in 188,400 new positions across Africa.
North Africa rebounds
Foreign
investors are regaining their interest in North Africa, particularly in
Egypt and Morocco as the political uncertainty following the Arab
Spring in 2011 begins to fade. North Africa attracted 22.2% more FDI
projects in 2014 than in 2013, and accounted for slightly more than half
(51%) of all African FDI capital inflows, against just 19.1% in 2013.
And the number of jobs created as a result of FDI, in a region where
they are sorely needed, more than trebled to almost 80,000.
In
Sub-Saharan Africa (SSA), while key economies like South Africa,
Angola, Nigeria, Ghana and Kenya received fewer FDI projects than in
2013, the average value of each project across the region almost doubled
(from US$67.8m in 2013 to US$174.5m per project in 2014). Mozambique
(88.2%) and Ethiopia (47.1%) were among the star performers, attracting
growing inflows of projects. Over the longer term, South Africa has been
the most popular destination for FDI projects, attracting twice as many
projects over the past five years than any other African country.
Traditional investors regain interest
Regionally,
Western European and intra-African investment remain the top sources of
FDI; though 2014 saw traditional investors, including North America and
the Middle East, refocus attention on Africa. US-headquartered
companies led as the largest investors into Africa last year, launching
101 FDI projects, and accounting for 13.8% of total FDI projects in
Africa, an increase from a 9.8% share in 2013. South African investors
were again prominent, initiating the second-most FDI projects on the
continent. UK investment was down substantially, but investors from the
UAE and France were resurgent, ranking fourth and fifth respectively.
Sectors in vogue with foreign investors
A
growing consumer class and rising urbanization in Africa are shaping
the continent’s future and defining new trends. In line with these
trends, FDI inflows into real estate, hospitality and construction (RHC)
have surged, emerging as a leading sector for FDI with the percentage
share in capital value at 43.8% and job creation at 33.6%.
In
terms of numbers of FDI projects, the largest share of investor
activity continues to be attracted by three consumer-facing sectors –
technology, media and telecommunications (TMT), financial services, and
consumer products and retail (CPR). One-third (31%) of the respondents
to the survey also expect agriculture to emerge as a key driver of
growth in Africa over the next two years.
Investor perceptions of Africa
Based on the results of the EY survey, perceptions of Africa’s attractiveness have deteriorated slightly over the past year.
Sita
says: “The shift in perceptions is the lowest since we initiated our
survey. However, it is important not to overstate this deterioration.
Overall, a majority of respondents were positive about the progress made
in Africa over the past year, and believe the continent’s
attractiveness as a business destination will improve over the next
three years. Africa continues to rank favorably compared to other
regions, particularly among respondents who know Africa well. In fact,
those already doing business in Africa remain overwhelmingly positive,
again ranking the region as the most attractive investment destination
in the world.”
Looking ahead
Sita
concludes: “This mixed picture is not surprising. It reflects the
diversity and complexity of this great continent of ours – there is
never a one-size-fits-all answer. Perspective remains important. Ours
has been, and remains, a glass half-full perspective. However, Africa’s
future will not take care of itself. Our view is that, although
tremendous progress has been made over the past 15 years, Africa and its
leaders are poised at an inflection point: deliberate and urgent
choices are required to raise levels of productivity and
competitiveness, accelerate structural transformation and make the shift
toward an inclusive, sustainable growth path.”
Habari Zingine
Mjulishe Mwenzako
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