/ 3 May 2011

Foreign investment in Africa on rise

Global executives expect that new projects in Africa will enjoy strong growth from next year, with inflows of foreign direct investment forecast to reach US$150-billion by 2015, according to a survey of 562 global executives.

Foreign direct investment was just more than US$200-billion in 2008, but had dropped significantly to less than half of that in 2011.

However, the first Africa Attractiveness Survey by Ernst & Young, released on Tuesday, predicts that, over the next five years, the average economy will outpace its Asian counterpart, in line with the capital investment growth forecast.

Ernst & Young analysis of foreign direct investment projects shows that, over the past decade, Africa has witnessed an increase in inward foreign direct investment from 338 new projects in 2003 to 633 in 2010 (an increase of 87%). Despite a drop in investment in the past couple of years following a peak in 2008, Africa has remained an attractive investment destination throughout the global downturn and has managed to maintain its relative share of global investment flows as a result.

When it comes to investment strategies, the survey shows Africa is high on the agenda of global investors, with 42% of the businesses surveyed considering investing further in the region and an additional 19% of executives confirming they will maintain their operations on the continent. Those companies that have invested and already integrated Africa into their overall investment strategy are particularly positive.

Ernst & Young says that, over the past year, more than 100 companies have engaged with them on their African growth strategies. — I-Net Bridge