A new report released by Ernest & Young Global (EY) on Monday indicates that the East African Community region dominates Sub-Saharan Africa in attracting more Foreign Direct Investments (FDI).
EY’s latest Africa Attractiveness report measures FDIs in terms of the number of projects registered in the country or region.
According to the report, East African region became the single largest beneficiary of FDI with 197 projects, a representation of 27 per cent of total projects registered in Africa.
Southern Africa, by contrast, fared lowest of the four major regions, at 162 projects (23 per cent).
Generally, the report highlights that Africa attracted 718 FDI projects, up 6 per cent from the previous year. The study attributes this to a recovery in the continent’s economic growth, following a difficult preceding year.
The higher project numbers were driven by interest in what Ernest and Young calls the ‘next generation’ sectors. These are manufacturing, infrastructure and power generation.
Despite the rise in FDI, project numbers remain below the 10-year average of 784 projects (per annum), the report says.
According to Ajen Sita, EY Africa Chief Executive, “2017 was in many respects a key year for the continent with multiple changes in leadership across a number of countries, including South Africa, Zimbabwe and Angola.
“In addition, Kenya’s election was drawn out which created uncertainty at the time. Changes in leadership have in turn led to a renewed urgency to implement fresh policies as new administrations move to address slow economic growth,” he said.
Meanwhile, the United States of America remains the single biggest country investing in Africa, while Western Europe (UK, Germany and France) is by far the biggest regional investor.
The report found that South Africa, Morocco, Kenya, Nigeria and Ethiopia were the dominant anchor economies within their respective regions, collectively accounting for 40 per cent of the continent’s total FDI projects.
Sita noted that shifting focus on improving public sector efficiencies and finances, minimizing bureaucratic processes and partnering with the private sector on major projects, will enable more countries to stimulate much needed FDI.
“In addition, they should continue to focus attention on increasing their scores on the ease of doing business and global competitiveness rankings,” he added.