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EY report shows where investors are putting their money in Africa
A recent report released by Ernst & Young, titled Executing Growth, EY’s 2014 Africa Attractiveness Survey, shows that foreign direct investment (FDI) in Sub-Saharan Africa has gone up by a massive 4.7% last year.
With investment in technology, media and telecommunications showing the highest growth, and the retail industry second highest, the study also found a general shift from extractive industries like oil, gas and minerals to consumer-related sectors. This is very good news for the region indeed.
Based on combined analysis of international investment into Africa since 2003, the report found an increase of FDI in Sub-Saharan Africa but a decrease in North Africa. This, the report notes, is mostly due to a steady decline of projects in North Africa because of instability over the last few years.
Ajen Sita, Chief Executive Officer, EY Africa, comments, “Africa’s share of global FDI projects has grown steadily over the past decade and it is a promising sign that investors are now looking across the continent and to new sectors. Further regional integration and infrastructure development should continue to entice investors to the exciting investment opportunities that Africa can offer.”
Furthermore, while more established markets like South Africa and Nigeria remain the top economies of interest, they did show a slight decline in FDI. Countries such as Kenya, Ghana and Mozambique all moved up the ranks.
The report also suggests steady momentum in the Intra-African investment. The UK became the clear leader in total number of projects while the US fell to second place.
South Africa, the third largest investor, showed a 16% decline on last year but a significant increase from pre-crisis levels when it registered.. There was a sharp uptake in FDI projects by Spanish and Japanese companies with increases of 52% and 77%, respectively.
Based on a 2014 survey of over 500 global business leaders about their views on the potential of the African market, EY found the continent the second most attractive investment opportunity for the first time since the annual study launched more than a decade ago.
Having said that, it also found a stark contrast in countries who already operate in Africa and those who don’t. Those with no business presence in Africa view the continent as the world’s least attractive investment destination.
