Due to Africa being home to seven of the 10 fastest growing economies in the world, the continent is fast becoming top of mind for many global businesses. According to Sumesh Rahavendra, head of marketing for DHL Express sub-Saharan Africa, while the growing interest from global parties is beneficial for much-needed foreign investment, local businesses should also be encouraged to capitalise on the continent’s increasing economic growth.
The EY 2014 Africa Attractiveness survey recently revealed that Africa has become the second-most attractive investment destination in the world, up from the third-from-last position in 2011. In 2013, Africa’s share of global foreign direct investment (FDI) projects reached 5.7 per cent, its highest level in a decade.
“The rise of Africa has been well documented over the past decade and has now become one of the biggest frontiers for trade and investment,” Rahavendra says. He points to recent figures by the International Monetary Fund, which also tell the story of Africa rising. Its latest Regional Economic Outlook: Sub-Saharan Africa April 2014, revealed that real GDP growth in sub-Saharan Africa is forecast at 5.4 per cent this year.
He adds that this overall economic growth forecast is surpassed by many of the African countries’ prospects, especially low-incomes states, such as Rwanda and Sierra Leone, which are projected to grow by 7.5 per cent and 13.9 per cent.” The Africa Attractiveness survey revealed that South Africa remained the largest destination for FDI projects. However, countries such as Ghana, Nigeria, Kenya, Mozambique, Tanzania and Uganda have become more prominent on investors’ radars.
For example, FDI projects in Mozambique grew at a compound annual growth rate in excess of 30 per cent since 2007. In 2013, Mozambique received 33 FDI projects, up 32 per cent from the previous year. While coal deposits and offshore gas fields attract investors, infrastructure projects are another focus, with the country currently having more than US$32bn worth of active infrastructure projects. A key focus area of these projects include developing road and rail transport networks to link the country’s coal reserves to the main corridors, as well as expanding port facilities.