Encouraging as the signs are, more needs to be done because Africa’s growth remains below potential. FDI inflows, for example, are still below the annual average of the last 10 years.
Looking at South Africa, Hlophe noted that the country attracted the highest number of FDI flows projects in Africa (110). South Africa however only attracted US$5m in FDI, placing it behind Egypt (US$12m), Algeria (US$9m), Nigeria (US$8m), Ethiopia (US$7m) and even Zimbabwe (US$6m).
“Despite being a country critically lacking in consumer and business confidence, and with unemployment stubbornly high, it is encouraging that South Africa remains on investors’ radar.
“An urgent focus on implementing economic reforms as outlined in the President’s economic stimulus and recovery plan announced in September 2018 and progressing State Owned Companies plans to strengthen governance and stabilise cash flows, will go a long way towards stimulating increased FDI flows,” he added.
Technology as FDI magnet
Technology focused FDI, in Africa and the rest of the world, is rising steadily as the pace of digital transformation picks up. “While Africa is still behind the technology curve, there is a once-in-50-years opportunity for the continent to leapfrog incremental technology advancement. By adopting digital transformation successes from more advanced countries - such as intelligent automation, cloud-based software deployment and data storage - Africa can quickly scale up its technology use.”
Hlophe added that the Fourth Industrial Revolution (4IR) meant investing in digital infrastructure that enables independent devices (such smart phones, computers and vehicle navigations systems) to communicate with each other by exchanging and analysing data to provide humans with actionable insights.
“Getting business and government to work together in investing in digital infrastructure, such as 5G data networks, WIFI platforms and Cloud data centres, will place African countries at the front of the FDI investment queue,” he concluded.
For more information, please contact the EY Africa Media Relations Team:
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