Sub-Saharan Africa remains one of the fastest growing regions in the world; this is despite a relative slow down.
According to the Ernst & Young 2016 Africa attractiveness program, Staying the Course, Africa was one of only two regions in the world in which there was growth in FDI project levels over the past year.
Ajen Sita, Africa Chief Executive Officer at EY said that over the past year, global markets have experienced unprecedented volatility.
“We’ve witnessed the collapse of commodity prices and a number of currencies across Africa, and with reference to the two largest markets, starting with South Africa, we saw GDP growth decline sharply to below one percent and the country averting a credit ratings downgrade. In Nigeria, the slowdown in that economy was impacted further by the decline in the oil price and currency devaluation pressure.”
The report added that this was reflected in the foreign direct investment (FDI) levels in 2015, where FDI project numbers increased by seven percent.
“Although, the capital value of projects was down year-on-year – from US$88.5b in 2014 to US$71.3b in 2015 – this was still higher than the 2010–2014 average of US$68b. Similarly, jobs created were down year-on-year, but, again ahead of the average for 2010 to 2014,” the EY statement continued.
Sita said the reality was that economic growth across the region was likely to remain slower in coming years than it had been over the past 10 to 15 years, and the main reasons for a relative slowdown were not unique to Africa.
“In fact, Africa was one of the only two regions in the world in which there was growth in FDI project levels over the past year,” said Sita. Africa came in second behind emerging Asia.
The report also saw East Africa closing the FDI gap, with Kenya emerging as a big gainer.
“In 2015, East Africa recorded its highest share of FDI across Africa, achieving 26.3% of total projects. Southern Africa remained the largest investment region on the continent, although projects were down 11.6% from 2014 levels,” said the report.
“The West Africa region saw a rebound in FDI projects by 16.2%, and interestingly in 2015, the region became the leading recipient of capital investment on the continent, outpacing Southern Africa.”