FDI into Africa surges 136 percent in 2014: survey

Foreign direct investment (FDI) into Africa surged to 128 billion U.S. dollars, up 136 percent in 2014, according to a survey released here on Tuesday.

This was a five-year high, with the number of jobs created from FDI jumping 68 percent, resulting in 188,400 new positions across the continent, said the survey conducted by Ernst&Young Global Limited (known as EY), a multinational professional services firm headquartered in London.

The Africa attractiveness survey also showed that Africa's share of FDI projects fell 8.4 percent in 2014, but remained well above pre-2008 levels.

The survey combines an analysis of FDI data into Africa since 2003, together with a survey of over 500 global business leaders, in over 30 countries, about their views on the potential of the African market. "In the past year, Africa has experienced stronger headwinds than in recent times. Consequently, economic growth this year is likely to be at its lowest in five years, dragged down by the impact of lower oil prices on the Nigerian and Angolan economies, the softening of other commodity prices, and South Africa's sluggish growth," said Ajen Sita, Chief Executive Officer at EY Africa.

At the same time though, economic growth across the continent remains resilient, he said.

Sub-Saharan Africa will still experience the second highest economic growth rate in the world this year, with 22 economies growing at a rate of five percent or higher, according to Sita.

In Sub-Saharan Africa, while key economies like South Africa, Angola, Nigeria, Ghana and Kenya received fewer FDI projects than in 2013, the average value of each project across the region almost doubled (from 67.8 million dollars in 2013 to 174.5 million dollars per project in 2014), according to the survey.

Mozambique (88.2 percent) and Ethiopia (47.1 percent) were among the star performers, attracting growing inflows of projects. Over the longer term, South Africa has been the most popular destination for FDI projects, attracting twice as many projects over the past five years than any other African country.

Foreign investors are regaining their interest in North Africa, particularly in Egypt and Morocco as the political uncertainty following the Arab Spring in 2011 begins to fade. North Africa attracted 22.2 percent more FDI projects in 2014 than in 2013, and accounted for slightly more than half (51 percent) of all African FDI capital inflows, against just 19.1 percent in 2013, said the survey.

The number of jobs created as a result of FDI, in a region where they are sorely needed, more than trebled to almost 80,000.

Based on the results of the EY survey, perceptions of Africa's attractiveness have deteriorated slightly over the past year.

"The shift in perceptions is the lowest since we initiated our survey. However, it is important not to overstate this deterioration. Overall, a majority of respondents were positive about the progress made in Africa over the past year, and believe the continent's attractiveness as a business destination will improve over the next three years," Sita said.

He said Africa continues to rank favorably compared to other regions, particularly among respondents who know Africa well.

"In fact, those already doing business in Africa remain overwhelmingly positive, again ranking the region as the most attractive investment destination in the world," Sita added. Endi