Nigeria, Kenya and South Africa have been ranked as Africa’s top investment destinations in Ernst & Young’s (EY’s) Africa Attractiveness Survey.
The survey revealed a dramatic improvement in the continent’s perceived attractiveness, now at second place. Although foreign direct investment (FDI) numbers painted a mixed picture, it showed that companies are successfully growing in Africa.
In 2013, Africa’s share of global FDI projects reached 5.7 per cent, its highest level in a decade. The number of new FDI projects in Africa increased by 4.7 per cent, although the total number of new FDI projects declined by 3.1 per cent, due to the political, uncertainty in North Africa.
However, the report culled from CPAFRICA website, showed that the average size of FDI projects increased to $70.1 million in 2013, from $60.1 million in 2012.
In terms of destination, while South Africa maintained its position as the top FDI destination, emerging hotspots for investment were listed as Kenya, Ghana, Mozambique, Uganda, Tanzania and Zambia.
“The prime factors behind the sub-Saharan African growth story are strong macroeconomic growth outlook, improving business environment, rising consumer class, abundant natural resources, democratic dividend and infrastructure development.
“African investors nearly tripled their share of FDI projects over the last decades and intra-African investment has also driven job creation on the continent.
“This growth is fueled by the need for improved regional chains and strengthening regional integration,” it added.
It noted that with the diversification of economic activity in Africa gathering pace, growing employment levels are creating a new consumer class.
This it said paved the way for increasing FDI in consumer-focused services and manufacturing sectors.
“Sectors other than extractive are growing in importance. The most striking observation from this year’s survey is how Africa’s perceived attractiveness has improved.
“In less than five years, Africa has risen to become the second most attractive investment destination in the world, tied with Asia.
“South Africa, Nigeria and Kenya are considered the most attractive investment destination in Africa, whereas Morocco is seen as the leading destination for doing business in North Africa, largely on account of its relatively stable political environment,” it added.
Continuing, it added: “Even though investment perceptions have improved so dramatically, actual investment in Africa has not accelerated as much since many potential foreign investors contine to view the entire continent as a high-risk destination.
“This view is often based on perceptions that are 20 to 30 years out of date. But it is important to highlight the real challenge of doing business on the continent.”