Attractiveness Program 2016
Year end update
The implications of multispeed growth for FDI in Africa
2016 has been the worst year for average economic growth across Sub-Saharan Africa (SSA) in over 20 years. However, it is evident that the overall slowdown in growth masks significantly variable economic performance. The sharp downward revisions in growth forecasts this year mainly reflect challenging conditions in SSA’s three largest economies, Angola, Nigeria and South Africa. Outside of these three economies, a number of bright spots remain, particularly in the East, Francophone and North African regions, where growth rates of 4% and above are still being achieved. Economic recovery in Angola, Nigeria and South Africa is likely to be a tough and gradual process. However, a diverse group of other economies – including Cote d’Ivoire, Senegal, Ethiopia, Kenya, Tanzania, Mozambique and Egypt are expected to sustain high growth rates over the next 5 years.
We anticipate that this mixed picture – one that the International Monetary Fund recently referred to as “multispeed” growth – will be reflected in FDI patterns over the next few years. We also anticipate that investor sentiment towards Africa as an attractive investment destination is likely to remain somewhat softer over the next few years. This has far less to do with Africa’s fundamentals than it does with a world characterized by heightened geopolitical uncertainty and greater risk aversion. Companies already doing business in Africa will continue to invest, but will probably exercise a greater degree of caution and be more discerning. Some of them will invest at a slower pace, looking to consolidate operations and drive profitability; while others are likely to double down on their investments, using this period of economic slowdown to further strengthen positions in key markets.Read further and download the report below.
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