Africa: an emerging divide

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In aftermath of Arab uprising, north Africa has failed to regain its share of continent’s FDI

Since the Arab uprising of 2011 many governments in north Africa have made efforts to attract foreign investment, through political reform and development of infrastructure. But investors seem unconvinced

Data from fDi Markets, a Financial Times service that monitors cross-border greenfield investment, show a persistent gap between FDI targeting north Africa and the rest of the continent.

Recently released data for 2015 show that, in terms of project numbers, the gap widened to 421 projects, from 404 in 2014.

Before the upheavals of 2011, north Africa consistently obtained a much larger share of investment into the continent.

It accounted for 40 per cent of all Africa’s FDI between 2003, when fDi Markets began collecting data, and 2010, before falling to just 28 per cent in the period 2011-15.

North Africa has seen a big reduction in large-scale, capital-intensive projects. Hydrocarbon developments accounted for 148 projects before 2011 and just 32 since; a difference representing $31.6bn.

There was a similar decline in real estate, another high capex sector, with an average of 12 projects a year recorded before 2011 and just 4 a year after.

Some of this can be attributed to continuing political uncertainty and the pervading turmoil in the region. Libya is unsurprisingly a shadow of its former self, attracting an average of $89m a year post-2011, compared with $4.2bn before.

However, the rest of Africa and its growing appeal as a truly emergent market does not appear to have been affected by the malaise north of the Sahara.

South Africa, a long-time powerhouse, has continued to cement its role as the continent’s destination of choice. Since 2011 it has averaged 150 projects a year compared with just 83 before.

Kenya has also broadcast its credentials as an emerging FDI location, recording its highest ever number of inward invested projects in 2011 before surpassing this in 2013 and again in 2015. In 2015 Nairobi ranked as the top city for inward African investment.

South Africa and Kenya are not alone as, across Africa, non-traditional investment locales have begun to emerge. Uganda had a bumper year in 2015, while the Ivory Coast recorded its highest ever market share of African FDI.

Sub-Saharan Africa is emerging as a real force in the attraction and retention of greenfield foreign investment, while the Sahara appears now as much a barrier to FDI as it once was to travel.

Source : http://www.ft.com/intl/cms/s/3/12110b56-ed1a-11e5-888e-2eadd5fbc4a4.html

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