Though foreign direct investment (FDI) into Africa remains small by global standards, but as a proportion to the average Gross domestic product (GDP) of the countries in the region, it is significant, according to EY Africa Attractiveness report 2019.
The report, presented at the World Economic Forum (WEF) meeting in Cape Town, South Africa, revealed that many African countries face an unprecedented set of economic challenges that should be addressed urgently for creating an enabling business environment.
The report says that East Africa will out-pace the other regions in growth parameters, leading to an uneven growth for the continent. The continent’s growth was 3.8 per cent in 2018, with Sub-Saharan Africa lagging behind at 2.6 per cent. As against the public perception that China is the largest investor in the continent, the study reveals that the US and Western Europe are Africa’s largest investors. Referring to the FDI flows to the individual countries, the report says that the flow is generally influenced by the degree of business friendly policies of the economies.
Giving the quantum of investment received by respective economies, the study points out that that South Africa only attracted US$5m in FDI, placing it behind Egypt (US$12m), Algeria (US$9m), Nigeria (US$8m), Ethiopia (US$7m) and even Zimbabwe (US$6m). Technology-focused FDI, in Africa, is rising steadily as the pace of digital transformation picks up. The study also pitches for Africa adopting digital transformation technologies, such as intelligent automation, cloud-based software deployment and data storage to scale up its technology value chain. It also calls for private-public partnership for investing in digital infrastructure, such as 5G data networks, WIFI platforms and Cloud data centres.
