We are excited to present our ninth edition of the Africa Attractiveness report which signals a return to the growth trajectory of Foreign Direct Investment (FDI) to the continent.
In 2018 we saw a number of government leadership changes that signalled economic reform opportunities that could be harnessed to facilitate increased FD flows.
Elections in Zimbabwe and the appointment of a new President promised a more business friendly environment. Anticipated economic reforms in South Africa are yet to materialise and the challenges of under-performing State Owned Companies, such as Eskom, have negatively impacted economic growth. Nigeria saw the return of the incumbent President but the six months delay in appointing a cabinet has stalled the progress of the economic agenda. The above examples illustrate challenges experienced across the continent in key FDI destinations.
Despite these challenges, there is positive news.
In 2019 we have seen a further spread of political reform and adoption of continent-wide trade agreements, that create an enabling environment for economic growth and attraction of FDI. These developments provide a good foundation for economic growth and increased FDI flows.
The recently ratified African Continental Free Trade Area Agreement (AfCFTA) could prove to be a major growth stimulus. Bold action will be required to take advantage of this foundation. We therefore ask the question: How can bold action become everyday action?
FDI in Africa remains largely steady
FDI by source, destination and sector
The US and France remain Africa’s single largest investors
Services remains the dominant focus, making 66% of the total.
Industry makes up 23% with the balance into Extractives – 11%.
Africa’s growth remains uneven
Funding infrastructure must be sustainable and profitable. With an increasingly geopolitical outlook, African can shape its own future through the African Continental Free Trade Agreement.
The digital age is allowing governments to connect and serve their citizen more affordably and rapidly than before.
How can Africa stimulate greater FDI?
- Set a policy framework that is focused, business-friendly and build competitive advantage
- Resolve political disputes and building a compelling vision is critical
- Manage public debt at sustainable levels
- Fund infrastructure - sustainably and profitably