Africa is hot – investor perceptions survey

2014-05-15 17:19

There has been a dramatic overall improvement in investor perceptions, according to consulting firm Ernst & Young’s 2014 Africa Attractiveness Survey.

EY surveyed more than 500 global leaders about their views on the potential of the African market.

Investors seem to be excited by prospects in sub-Saharan Africa in particular.

The latest data shows that while there has been a decline in the number of foreign direct investment projects – from 774 in 2012 to 750 in 2013 – it was primarily because of ongoing uncertainty in north Africa.

While foreign direct investment projects in north Africa declined by nearly 30%, projects in sub-Saharan Africa increased by 4.7%. In 2012, there were 593 foreign direct investment projects in sub-Saharan Africa and in 2013 there were 621.

“Africa’s share of global foreign direct investment projects has grown steadily over the past decade and it is a promising sign that investors are now looking across the continent and to new sectors. Further regional integration and infrastructure development should continue to entice investors to the exciting investment opportunities that Africa can offer,” said Ajen Sita, the CEO of EY Africa.

There was a significant movement in the list of top 10 countries by foreign direct investment projects in 2013. Only South Africa and Nigeria retained their first and third positions from 2012: South Africa with 142 projects and Nigeria with 58 projects. Countries including Kenya, Ghana and Mozambique moved up the ranks.

Zambia and Uganda were the new entrants on the top 10 list in 2013.

In that year, both west and east Africa surpassed North Africa for the first time, becoming the second and third most attractive regions in Africa after Southern Africa.

Africa’s cities are the hotspots of economic and investment activity on the continent. Nearly 70% of the respondents stressed the significance of cities and urban centres in their investment strategy in Africa.

In sub-Saharan Africa, half of the respondents quote Joburg as the most attractive city in which to do business, ahead of Cape Town. Nairobi and Lagos are ranked third and fourth.

In north Africa, Casablanca, Cairo and Tunis are perceived as the top three cities in which to do business.

“Africa’s growth prospects are likely to remain solid, as an urbanising and rising middle class drives demand for consumer products and improved services,” said Sita.

The top three sectors for investment, according to the survey, were technology, media and telecoms with 150 projects, retail consumer products (131) and financial services (112).

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