Despite a reported global decline in foreign direct investment (FDI), Africa gained eleven percent on 2017 inflow. According to the United Nations World Investment Report 2019, investments rose to $46 billion, with East Africa and North Africa recording significant leaps.
While UNCTAD Secretary-General Mukhisa Kituyi lauded and credited the take-off of the African Continental Free Trade Agreement (AfCFTA) the improvement, other less obvious or imagined factors have added heft to Africa’s solidity in the face of global direct investment slump.
Analysts think one reason for Africa’s heftier attractiveness is the greater number of special economic zones, of which Africa has 237, operated in 38 African countries.
Another one that is quite understated is the increased ambitiousness of many countries, with an astute collective of leaders like South Africa’s Cyril Ramaphosa, Rwanda’s Paul Kagame, Kenya’s Uhuru Kenyatta, and Ethiopia’s Abiy Ahmed. There’s a sense of heightened competitiveness among the regions and even intra-region. Countries are paying attention to what is working elsewhere and adapting them to their own circumstances.
This new tolerance for indirect mentorship has led to greater cooperation among African countries, with leaders mending fences faster and sharing innovation more than ever before. Indeed, it looks like there’s a rising distaste for ego-led policies and policymakers, making less room for dictators, creating room for idea sharers and adaptive transformers. This, in turn, has led to a greater willingness by leaders to put their money where their mouth is in policy terms. What we’re witnessing on the continent is a doing-more-than-saying era. This is reflected in the growth indices for countries and regions.
How regions and nations are faring
Egypt’s Abdel Fattah el-Sisi, for instance, has overseen an economic transformation, which, despite seeing investments deflate by eight percent, remains the largest FDI recipient in all four regions at $6.8 billion. Morocco, on the other hand, recorded the biggest jump of all, seeing its FDI rise by thirty-six percent at 3$.6 billion, with major investments in the finance and automotive sectors. Moroccan PM Saad-Eddine El Othmani has stressed the importance of innovation and cooperation in the past.
South Africa is another country enjoying a dominant phase in innovation, with a thirteen percent increase in FDI, recovering from a two-year slump. Relative political stability and highly inclusive investor-genial environments have seen the country sharpen the dynamism of its inflow. In South Africa, FDI more than doubled to $5.3 billion. Elsewhere in Southern Africa, Angola looks poised for a big 2019 as it reorganizes the chaos in its oil and gas industry, with investments bulking up through the last two months.
Poise and elegance are worthy synonyms for East Africa’s two leaders, where Kenya bayoneted to the top of the gaining pile with a twenty-seven percent leap in FDI at $1.6 billion. Holding firm is Ethiopia, who saw an eighteen percent decline peg its FDI at $3.3 billion. With varied investments in manufacturing, hospitality, chemicals and oil and gas, East Africa was decidedly the most rounded and fastest-growing region in Africa.
Nigeria contributed to West Africa’s slump, recording a forty-three percent decline in inflow, landing at $2 billion. Ghana also saw a fall in inflow, dipping by eight percent, to $3 billion. Together, both countries took more than fifty percent of the whole region’s FDI. As a region, though, West Africa saw a combined fifteen percent slide.
A roll call of bankrollers
While China continues to sprint in investments across Africa, gaining sixty-five percent, France remains the top investor with an unchanged portfolio size for the past six years. The Netherlands did business, on the other hand, climbing an astonishing two hundred percent to become the second biggest direct investor.
Based on data through 2017, France is the largest investor in Africa, although its stock of investment has remained largely unchanged since 2013, followed by the Netherlands, the United States, the United Kingdom and China.
The World Investment Report helps policymakers by watching global and regional direct investment trends and documenting national and international policy developments. One imagines that with all the above factors coming into play over the next few years, and hopefully, with greater political mediation, Africa will claim even bigger thrusts in 2020.
By Caleb Ajinomoh
