Foreign Direct Investment in Africa 2015

Ernst and Young just published its Attractiveness Survey Africa 2015: Making Choices.  It contains a wealth of current information, primarily on foreign direct investment (FDI) in Africa.

In 2014, the number of new FDI projects in Africa fell 8.4 percent but remained well above 2008 levels.  Capital investment in Africa, however, surged to $128 billion, up 136 percent over 2013.  FDI investors returned enthusiastically to Egypt and Morocco and increased their projects in Ethiopia and Mozambique.  There were fewer projects in South Africa, Angola, Nigeria, Ghana, and Kenya.

There was a slight drop in the attractiveness of Africa for investment as a region.  Africa dropped from 2nd to 4th place in regional rankings after Oceania, North America, and Asia.  FDI in Africa has grown five fold since 2000 and is forecast to overtake  official development assistance (ODA) in 2015.  FDI is projected to reach just over $55 billion compared to just under $55 billion for ODA.  Portfolio investment is predicted to grow to $18 billion and remittances an astounding $65 billion.

Collectively, European investors began by far the largest number of FDI projects in Africa in 2014.  The United States was the largest single country investor, launching 101 FDI projects or almost 14 percent of all projects in Africa.  The UK and South Africa tied for second, the UAE was fourth, France fifth, and Germany sixth.  Although Chinese investment soared in 2014, it was only number 7 with the launching of 32 FDI projects valued at $6.1 billion and 4.4 percent of the total number of new projects.

External Financial Flows and Tax Revenues for Africa

The African Development Bank has just released its African Economic Outlook for 2015.  Chapter 2 titled "External Financial Flows and Tax Revenues for Africa" reports that private external flows in the form of investment and remittances now drive growth in external finance.  Foreign investments are expected to reach $73.5 billion in 2015.  Foreign direct investment is moving away from mineral resources and into consumer goods and services.  African sovereign borrowing is rocketing.  Remittances have increased six-fold since 2000 and are projected to reach $64.6 billion in 2015.  Official development assistance will decline in 2015 to $54.9 billion.