SA still leading FDI destination

STEADY: INVESTMENTS STEADY AT 29 PROJECTS

Africa attracted 718 FDI projects in 2017 – up 6% from the previous year.

FDI projects dropped to only three from 17 in 2016.

“Intra-African investment slowed, but remained prominent with 92 FDI projects, down 12% from 105 projects in 2016,” the report read.

“Adoption of the African Continental Free Trade Area (AfCFTA) is expected to provide the required impetus to intra-regional trade, investment and integration.”

Currently, 49 of the 55 member countries have committed to the agreement.

Southern Africa on the ropes

Following a 21% dip, Southern Africa lost its place as the top FDI destination in 2017.

The primary driver however was SA’s 31% FDI dip – hitting a 10year low.

Political uncertainty coupled with weak commodity prices were the major drivers for the slower economic growth, which ultimately repressed the economy’s attractiveness.

Africa Knowledge leader at EY Graham Thompson remains optimistic that the structural reforms under SA’s new leadership will yield results. “Historically, SA typically attracted between $5 billion to $7 billion per annum in FDI. “Should the new commitments take shape, they could provide a step-change to the FDI flows coming into SA. “Investors want certainty before they commit to longterm investments, and there is a desire for the country’s challenges to be amicably resolved.”

New commitments may improve FDI flows.

Edging towards manufacturing

Currently, Africa’s annual food import bill is $35 billion and is expected to rise to $110 billion by 2025. As such, economists often argue about the importance of manufacturing for sustainable economic growth and healthy trade balance positions.

The report noted that 2017 proved to be a landmark year for manufacturing in Africa with the highest number of projects received in the past decade. The number of projects grew by 62% to 224 (2016: 138).

“The automotive industry is a budding industry in Morocco with the country expected to become the largest car manufacturer in Africa by 2020,” read the report.