The EY.com, a global leader in assurance, tax, transaction and advisory services, says Egypt, Kenya, Morocco, Nigeria and South Africa are the key hub economies in Africa.
Its latest Africa Attractiveness report by Ms Fathima Naidoo, Africa Media Relations, said that the five countries collectively attracted 58 per cent of the continent’s total Foreign Direct Investment (FDI) projects in 2016.
She said that the report heightened geopolitical uncertainty and multi-speed growth across Africa.
Naidoo said that the report provided analysis of FDI into Africa over the past 10 years.
“The 2016 data shows Africa attracted 676 FDI projects, a 12.3 per cent decline from the previous year, and FDI job creation numbers declined by 13.1 per cent.
“However, capital investment rose by 31.9 per cent,’’ she said.
Naidoo said the surge in capital investment was primarily driven by capital intensive projects in two sectors, namely hospitality and construction, and transport and logistics.
She said that the continent’s share of global FDI capital flows increased to 11.4 per cent from 9.4 per cent in 2015, noting that this made Africa the second-fastest growing FDI destination by capital.
“This somewhat mixed picture is not surprising to us. Investor sentiment toward Africa 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 characterised by heightened geopolitical uncertainty and greater risk aversion.
“Investors with an existing presence in Africa remain positive about the continent’s longer-term investment attractiveness, but they are also cautious and discerning,’’ Naidoo quoted the report.
She said in a sign of ongoing diversification of Africa’s FDI investors, more than one fifth of FDI projects and more than half of capital investment into Africa came from Asia-Pacific in 2016, an all-time record.
Naidoo said that most notably, Chinese FDI into Africa increased dramatically, making the country the single largest contributor of FDI capital and jobs in Africa in 2016.
She said that by 2030, if Africa remained on track to be a three trillion dollar economy, growth needed to become more inclusive and sustainable to eradicate poverty at the levels that were required.
“If we accept the reality that physical connectivity, enabled by regional integration and the development of physical infrastructure, will remain a key stumbling block to inclusive growth across Africa for at least the next decade.
“Then the need to actively embrace digital connectivity becomes critical.
She said that efforts to harness the potential of digital technologies as a fundamental driver of inclusive growth were still far too piecemeal and fragmented. (NAN)