Foreign direct investment into Africa surges 27 pcBy BENON HERBERT OLUKA In Johannesburg | Friday, May 4 2012 at 12:17
Foreign direct investment into Africa more than doubled over the last decade--it's largest ever share-- due to growing optimism and investor confidence, global consultants Ernst & Young’s second African Attractiveness Survey indicates.
FDI projects grew by 27 per cent in 2011, pushing Africa's share of the world's investment to almost a quarter, with inflows now at about $80 billion and expected to reach $150 billion by 2015, according to the firm.
The survey released Thursday in Johannesburg showed that investment between African countries increased from 27 projects in 2003 to 145 in 2011, accounting for 17 per cent of all new FDI projects on the continent last year.
"There was strong growth in the number of new foreign direct investment (FDI) projects in Africa in 2011 with project numbers almost up to levels last seen in 2008,” says the report.
"In the last decade, Africa has seen an increase in inward investment from 339 new projects to the continent in 2003 to 857 in 2011 (an increase of 153 per cent)," it added.
"Investment has come from across the world, with strong growth in project numbers from rapid-growth markets [India, China, Saudia Arabia, Turkey and S. Korea] and developed markets alike with projects from the former increasing from 99 to 319 and developed markets projects from 240 to 538 since 2003. Intra-African investment has also been a key driver of this growth.”
The statement says overall, this year’s survey paints a positive picture reflecting growing confidence in Africa’s prospects.
“Sixty per cent of survey respondents say that their perception of Africa as a place to do business has improved over the past three years,” it said.
"Looking forward 73 per cent of respondents anticipate that Africa’s attractiveness will improve over the next three years, while only four per cent believe it will deteriorate.”
Despite the positive results, the report says Africa still attracts fewer FDI projects than emerging economies like India and China. Also, those yet to invest were seemingly still to be convinced, it said.
Ernst & Young Area Managing Partner for Europe, Middle East, India and Africa, Mark Otty, said the competition for global FDI is intensifying due to the fact that rapid-growth markets are not only dominating investor attention and capital flows, but also playing an increasingly strategic role in defining the global economic agenda.
"African countries must position themselves appropriately in this shifting landscape to attract a greater proportion of the investment that will accelerate growth and development,” he added, according to the statement by Ernst & Young.
The growth in intra-African investment is being led by the respective regional powerhouses of Kenya, Nigeria and South Africa.
"All three of these African economies are ranked among the top 20 investors into the rest of the continent between 2003 and 20011, and since 2007 the growth rate in investment from Kenya, Nigeria and South Africa has been 78 per cent, 73 per cent and 65 per cent respectively,” says the statement.
Ajen Sita, a Managing Partner: Africa at Ernst & Young, said, “There has been a radical shift in mindset and positioning over the last decade, with Africans themselves increasingly leading from the front by providing African solutions to Africa’s challenges.
"Clearly work still remains to be done, but pushing ahead with key initiatives such as regional integration and investment in infrastructure will ensure that Africa remains on a sustainable growth curve.”
The report comes two months after South Africa’s Deputy President Motlanthe Kgalema told the Ernst & Young Strategic Growth Forum Africa 2012 in Cape Town that Africa is becoming increasingly attractive to international investors even if the continent’s growth story is yet to be fully understood by the rest of the world.
Mr Kgalema noted that when the rich economies in the developed world were shrinking at an average of two per cent during the world financial crisis in 2009, sub-Saharan Africa continued to grow at an average of about 3.5 per cent.
He added that, according to current forecasts, Africa’s economy will grow at about 5.5 per cent this year and that capital investments in Africa are set to reach $150 billion in 2015 – tallying with an earlier forecast.
Should Kenya spend $8.2 million to acquire an office for retired President Kibaki?speak out
Read Story: Should Kenya spend $8.2 million to acquire an office for retired President Kibaki?
- Obama urged to cancel Dar visit
- Ethiopia edges closer to 2014 World Cup
- The girl who met Gaddafi 'in hell'
- Nairobi in pictures: Past and present
- Hospital quiet on Museveni birth records mystery
- 7 Kenyans held in Lagos over deported 'Nigerian'
- Ethiopia secures $300m Indian rail loan
- Kenyan call girls go high-tech
- The Nile saga: Will Egypt and Ethiopia go to war?
Beyond the ballot