Last year Africa attracted 718 FDI projects, which was up 6 percent from the previous year, in line with a recovery in the continent’s economic growth, said the Africa Attractiveness report, compiled by Ernst & Young (EY), a multinational professional services firm.
The higher project numbers were driven by interest in “next generation” sectors, namely manufacturing, infrastructure and power generation, said the report.
The report also highlighted the countries with the strongest FDI gains, with Ethiopia, Kenya and Zimbabwe experiencing a major uptick in FDI during 2017.
South Africa shares the title of the largest African FDI hub with Morocco, while southern, west, east and north Africa all receive more or less equal FDI, measured in project numbers.
Overall, these four major sub-regions each attract similar FDI when measured by project numbers.
The report found that South Africa, Morocco, Kenya, Nigeria and Ethiopia were the dominant anchor economies within their respective regions, collectively accounting for 40 percent of the continent’s total FDI projects.
For the first time ever, east Africa became the single largest beneficiary of FDI with 197 projects (27 percent of total projects), while southern Africa, by contrast, fared lowest of the four major regions, at 162 projects (23 percent).
While South Africa remains the continent’s leading FDI destination when measured by project numbers, for the first time ever the country’s lead is under threat with Morocco increasing its FDI projects by a sizable 19 percent to share the top spot with South Africa, according to the report.
“Over time and as Africa’s growth accelerates, we anticipate that South Africa’s share of inbound FDI will continue to decline, relative to the rest of the continent,” said EY Africa CEO Ajen Sita.
It illustrates the need for South Africa to ensure its leading economic role across the continent is sustained, he added.
By focusing on improving public sector efficiencies and finances, minimizing bureaucratic processes and partnering with the private sector on major projects, more African countries can stimulate much-needed FDI, Sita said.
“In addition, they should continue to focus attention on increasing their scores on the ease of doing business and global competitiveness rankings,” he said.