RENEW Strategies

The Africa Investment Report 2017

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Renata Makhoul
| October 4, 2017

2017 marks the rise of China as the largest investor in Africa, in terms of capital. Even though the number of greenfield FDI projects has decreased in 2017, total capital invested increased by 40% compared to the previous year. The largest proportion went to construction and real estate - representing a shift from the traditional extractive sectors.

It was also the year in which Ethiopia, Cote D’Ivoire, Tanzania and Senegal have all grown well above 6%, while Nigeria and South Africa witnessed poor economic performance.

We selected some of the highlights from The Africa Investment Report 2017, from This is Africa, a publication from the Financial Times.

Highlights:

  • 40% of announced greenfield FDI into Africa last year went into real estate with the same proportion being invested in construction. This is a shift from previous years, in which extractive sectors were at the top of African FDI charts, mainly attributed to a decline in commodity prices.
  • Construction together with manufacturing accounted for 62% of total capital investment
  • The top 10 destination countries for FDI into Africa accounted for 78% of the total number of projects into the region and 91% of the total capital invested.
  • According to the World Economic Outlook, International Monetary Fund, Ethiopia is expected to grow 7.5% on capital investments in each of the next two years, leading the ranking. 
  • In total, 470 companies invested in Africa in 2016, down from 506 in 2015.

The rapid growth in urbanization is probably the most important factor when considering the bullish outlook on Africa; it’s urban population is expanding by 15 million a year. Global private equity and sovereign wealth funds are pouring billions of dollars into business and industrial parks, retails complexes, logistics facilities and housing across the continent, in an attempt to capture the attractive returns presented.

Investing in Africa is not straightforward, and the same challenges persists – delays and unclear regulatory environment, to name a few. However, foreign investors can do well when taking calculated risks and thinking creatively about the destinations of their capital.

You can download the full report here


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