FDI inflow to Africa grows by 27% - Ernst and Young
Ernst & Young (EY) has decried the wrong impression of some investors about investment climate in Africa, even as Foreign Direct Investment (FDI) projects on the continent grew by 27 per cent from 2010 to 2011.
The Regional Managing Partner for West Africa, Ernst & Young (EY), Mr. Henry Egbiki, who disclosed this at the launch of Ernst & Young's 2012 attractiveness survey, weekend, said, "Many investors still view Africa as being a more challenging place to do business than other emerging market regions; despite the fact that in the World Bank's most recent Ease of Doing Business rankings, 14 African countries ranked ahead of Russia, 16 ahead of Brazil, and 17 ahead of India."
He further disclosed that Africa is often perceived as being inherently corrupt, saying, "While corruption no doubt remains a big challenge in Africa, 14 African countries rank higher than India, and 35 higher than Russia, in Transparency International's Corruption Perceptions Index."
While commenting on EY's findings in its "2012 attractiveness survey", Egbiki said, "The number of Foreign Direct Investment (FDI) projects in Africa grew 27 per cent from 2010 to 2011, and have grown at a compound rate of close to 20 per cent since 2007. Despite this growth, there remain lingering negative perceptions of the continent, but only among those who are not yet doing business in Africa.
"The story of Africa's progress, not just in economic but also in socio-political terms needs to be told more confidently and consistently. This broad-based progress is underscored by a substantial shift in mindset and activities among African themselves, with increasing self confidence and continued strong growth in intra-African FDI (which has expanded by 42 per cent since 2007)."
According to the survey by Ernst & Young, seven African countries are among the 10 fastest growing economies in the world, with 5.5 per cent of Africa's share of global FDI projects.
The survey noted that FDI flowed into diverse range of sectors, with manufacturing and infrastructure related activity accounting for a significant proportion of FDI.
However, Egbiki, noted that regional integration is critical to accelerated and sustainable growth in Africa, saying, "Creating larger markets with greater critical mass will not only enhance the African investment proposition, it is also the only way for Africa to compete effectively in the global economy.
According to him, "Bridging the infrastructure gap will be a key enabler of regional integration, growth and development. It also remains a key challenge and opportunity for investors. However, we are not naïve to believe that by simply removing trade tariffs we will create n integrated regional economy. Non tariff barriers to trade are more inhibitive of intraregional trade than tariff barriers."