FDI in sub-Saharan Africa up by 4.7% - CNBC Africa

FDI in sub-Saharan Africa up by 4.7%

Special Report

by Trust Matsilele 0

FDI in sub-Saharan Africa increased by 4.7 per cent in 2013. PHOTO: Getty Images

Zambia and Uganda were the new entrants in the top 10 list in 2013 with 25 and 21 projects respectively, an increase of more than 20 per cent.

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The Ernst & Young's 2014 Africa Attractiveness Survey: Foreign direct investment in sub-Saharan Africa report, also noted the rise on Intra-African investment.

Ajen Sita, chief executive officer, Ernst & Young Africa, noted that there was a noticeable growth of Africa’s share on global foreign direct investment (FDI) projects.

“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.”

The Ernst & Young report combines an analysis of international investment into Africa since 2003, with a 2014 survey of over 500 global business leaders about their views on the potential of the African market.

“The latest data shows that while there has been a decline in FDI project numbers from 774 in 2012 to 750 in 2013, primarily due to ongoing uncertainty in North Africa, they remain easily in excess of the pre-crisis average of 390 projects per year.”

“There is a noticeable divide between FDI trends in North Africa versus sub-Saharan Africa (SSA). While FDI projects in North Africa declined by nearly 30 per cent, projects in SSA increased by 4.7 per cent, reversing the decline of 2012.”

According to the report, the United Kingdom remains the lead investor into the continent, though intra-African investment continues to steadily rise.

The report also noted the dramatic improvement in investor perception about the attractiveness of Africa.

“Investors are also looking beyond the more established markets of South Africa, Nigeria and Kenya to expand their operations, as well as moving into more consumer-related sectors as Africa’s middle class expands.”

Michael Lalor, Ernst & Young’s Lead Partner Africa Business Center, noted the importance of foreign capital inflows into the region.

“External investors supply long-term capital, skills and technology, and intra-African investment creates a virtuous circle that encourages greater foreign investment.” 

(READ MORE: Africa needs to prioritise on internal development)

FDI projects in the real estate, hospitality and construction sector increased by 63 per cent, making the sector the fifth most attractive, up three positions from 2012. On the other hand, for the first time ever in 2013, mining and metals exited the top 10 sectors when measured by FDI project numbers.

However, stubborn perception gap remains between investors already operating on the continent and those who are not.