Foreign investment into Africa doubles

Foreign investment into Africa doubles

Published: May 10, 2012

Foreign direct investment (FDI) into Africa has more than doubled since 2003 and most global executives believe the continent’s reputation as a business location has improved.

In the past nine years the number of FDI projects on the continent rose to 857 from 339. The market was worth some US$80bn in 2011, representing about 5.5% of global FDI projects – the largest proportion Africa has accounted for.

African projects funded by money from developed markets have increased to 538 from 240 since 2003, while those from emerging markets reached 319 from 99, according to analysis by accountancy firm Ernst & Young.

The number of projects backed from the UK jumped by 27% between 2007 and 2011, while those funded by the US and Germany showed a 21% rise. There have also been increases in investments from China, the UAE, India, Saudi Arabia, South Korea and Turkey.

Intra-Africa investment has also increased, with a 23% annual compound growth rate since 2007. This growth has been led by the continent’s largest economies, such as Kenya (78% growth), Nigeria (73%) and South Africa (65%).

Of 500 global executives responding to an Ernst & Young survey, 60% believe the perception of Africa as a business location has improved in the past three years and 73% predict that this will continue in the next three years. Only 4% predict that it will deteriorate. About 92% of the respondents who say Africa has a positive reputation already have a presence on the continent.

Africa’s GDP is forecast to grow by as much as 5% each year in the next decade while FDI is expected to reach US$150bn by 2015, according to Ernst & Young.