Direct Investments into Africa are on the decline as investor sentiment gets
swayed by governance issues and and as economies in the region slow down.
A report by EY on the attractiveness of Africa on Monday showed the
value of funds invested in African projects declined to $71.3bn in 2015.
2016 Africa attractiveness programme: Staying the course also showed that
jobs created in Africa in 2015 were down compared to the previous year.
2014, foreign investors invested as much as $88.5bn into Africa while the
average for the 2010 to 2014 period was $68bn, EY said.
Sita, the Africa chief executive officer at EY, said GDP growth in South Africa
“decline(d) sharply to below one percent” although the country also managed to
avert a credit ratings downgrade.
Nigeria, the slowdown in that economy was impacted further by the decline in
the oil price and currency devaluation pressure,” said Sita. Nigeria is
Africa’s biggest economy while SA recently reclaimed 2nd place after overtaking Egypt.
reality is that economic growth across the region is likely to remain slower in
coming years than it has been over the past 10 to 15 years, and the main
reasons for a relative slowdown are not unique to Africa,” added Sita.
Africa attracted the largest investment although “projects were down 11.6% from
2014 levels” while West Africa saw a rebound in FDI projects by 16.2%. In 2015,
the region became the leading recipient of capital investment on the continent.
Africa experienced 8.5% year-on-year growth in FDI projects. Furthermore, while
projects are increasing in North Africa, they are increasing at a much faster
rate than in Sub-Saharan Africa.
report also notes that over the past 10 years, there has been a shift in sector
focus in FDI from extractive to consumer-facing industries.
and metals, coal, oil and natural gas, which were previously the key sectors
attracting major FDI flows, have given way to consumer products and retail
(CPR), financial services and technology, media and telecommunications (TMT),
accounting for 44.7% of FDI projects in 2015.
further evidence of sector diversification came through, with business
services, automotive, cleantech and life sciences all rising in significance and
becoming the likely ‘next wave’ for investors,” further notes EY.