Africa's foreign direct investment reached a record $83 billion in 2021, accounting for 5.2% of the global total.

Foreign direct investment in Africa fell to $40 billion in 2020, but recovered to $45 billion in 2022, returning to pre-epidemic levels.

The most prominent sectors to attract foreign inflows are clean energy, new infrastructure, digital financial services, and select manufacturing industries.

The African Continental Free Trade Area (AfCFTA) aims to create a single market of 1.3 billion people and a $3.4 trillion GDP.

Chinese financiers committed $153 billion to African public sectors from 2000 to 2019.

European investors, led by the UK, France, and the Netherlands, are the largest owners of FDI in Africa.

The UK is Africa's second-largest foreign direct investor after China, with $65bn invested.

India is now the fifth largest investor in Africa, with 18 new diplomatic missions on the continent.

Major foreign companies such as Toyota, Nissan, and Toshiba have established a presence in Africa.

Google will invest $1 billion to support Africa's digital transformation.

Africa's technology boom is expected to grow its Internet economy to 5.1% of GDP, or $185 billion, by 2025.

In 2021, African startups received $1.31 billion in venture capital investment, mainly in FinTech and other in-demand areas like AgroTech and HealthTech.

The US has proposed a mega infrastructure plan for Africa under the 'Build Back Better World' (B3W) initiative.

The G7's Partnership for Global Infrastructure Initiative is a $600 billion lending program for infrastructure projects in developing countries, particularly Africa.

The European Commission announced EUR 150 billion in investment funding for Africa in February 2022.

Ethiopia is a leading FDI destination in Africa, attracting companies like Huawei and Alibaba with its infrastructure investments.

Africa's foreign direct investment reached a record $83 billion in 2021, accounting for 5.2% of the global total.

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Content: FDI flows to North Africa down 5% in 2021
Foreign direct investment to North Africa fell 5 percent to $9.3 billion for the whole of 2021, according to a report on “Investing in the World ” released by the United Nations Conference on Trade and Development (UNCTAD) on June 9, 2022.
These investments, towards Tunisia, improved slightly from $652 million in 2020 to $660 million in 2021.
The same investment to Morocco increased by 52 percent to 2.2 billion dollars in 2021, compared with a 12 percent drop to 1.5 billion dollars in Egypt.
Despite the decline in these investments in Egypt, it remains the second country to benefit from the inflow of foreign direct investment in Africa.
According to the same report, the flow of foreign direct investment in Africa reached a record level of $83 billion for the whole of 2021, more than double the investment achieved for the whole of 2020.
Despite this significant growth, the flow of investment to Africa in 2021 represented only 5.2 percent of the global total, compared to 4.1 percent in 2020.
Most African countries saw a slight increase in foreign direct investment (FDI) in 2021.
These investments developed in South, East and West Africa, while they maintained their previous levels in Central Africa, while declining in North Africa.
Europeans remain the most important investors in Africa, led by investors from the United Kingdom ($65 billion) and France ($60 billion).
Increased investments in renewable energy
Despite the overall positive trend of foreign direct investment towards Africa, the announcement of new projects remained weak at $39 billion and shows only a weak recovery compared to $32 billion recorded in 2020 and less than $77 billion recorded in 2019.
In parallel, the number of international projects in the field of renewable energies in Africa increased to an estimated 71 projects, almost double the 36 projects completed in 2011.
Among these projects is a $20 billion project that aims to export wind energy to the UK from Morocco.
By laying 3,800 km of submarine cables.

Foreign direct investment in Africa fell to $40 billion in 2020, but recovered to $45 billion in 2022, returning to pre-epidemic levels.

The most prominent sectors to attract foreign inflows are clean energy, new infrastructure, digital financial services, and select manufacturing industries.

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Content: « Money » monitors the forecasts of economic analysts for foreign investment flows in the current year
A number of them predicted it would reach $10 billion.
Samar Al-Sayed
Praying for Mahmood
6: 59 AM, Wednesday, 27 Jul 22
Wael Ziadeh: The Russian-Ukrainian war is an opportunity for the Egyptian stock exchange to attract more capital
Esraa Ahmed: Clean energy, infrastructure and digital financial services are the most attractive sectors
Hani Geneina: Companies should be encouraged to reinvest their profits instead of transferring them to parent entities abroad
Naaman Khaled: Most of the money will come from Gulf markets
The Egyptian government aims to increase foreign direct investment flows, especially the Gulf, in the local market in the coming period, in light of the repercussions of the Russian-Ukrainian war on the global and local economies, and a number of analysts and macroeconomic experts estimated the value of these investments to reach $10 billion, driven by various factors, including the decline in the stock prices of companies on the stock exchange, and the exchange rate of the pound against the dollar.
The latest report issued by UNCTAD in June on the volume of foreign investment flows in 15 African countries last year showed that Egypt ranked second in the list, recording the volume of flows about 5.122 billion dollars compared to 5.852 billion in 2020 compared to 9.010 billion in 2019.
South Africa came first last year with a 1,235% jump in investment inflows of $40.889 billion compared to $3.062 billion in 2020 and $5.125 billion in 2019.
Wael Ziadeh, founder and CEO of Zela Capital, said that the Russian-Ukrainian war had negatively affected foreign direct investment flows in the world, while inter-state assistance had increased to counter the negative consequences of the war.
He explained to Al-Mal that these negative effects included the exit of investment flows from some emerging countries, which led to the impact of their trade balance, especially as their imports of food and oil more than their exports, for example Turkey and many European countries, as well as Sri Lanka.
On the other hand, the war represents a positive area for these countries, especially in activating the stock market sector, he said, adding that in this context, the Egyptian Exchange has opportunities to attract more foreign investments in the coming period.
He predicted that Egypt will take no more than six months to recover its trade balance once the war is over, as the prices of petroleum products and food will fall rapidly, as they rose rapidly after the outbreak of the war.
The objectives of the Egyptian government published in July 2021 in the second and final review report of the Credit Standby Arrangement Program signed with the International Monetary Fund, amounting to about $5.4 billion, indicated that the percentage of net foreign direct investments of GDP will rise to 2.5% in the current fiscal year compared to 2% in the last fiscal year, adding that it recorded 1.4% in the fiscal year 2021 / 2020, 2% in 2019 and 2.6% in 2019. / 2018.
These targets pointed out that the proportion of net foreign direct investment will jump to 3% of GDP in the fiscal year 2025 / 2024 compared to 2.9% in 2023 / 2024.
The government also expected in the report to increase the volume of foreign direct investment flows in the local market to about 11.7 billion in the current fiscal year against 8.6 billion dollars in the last fiscal year 2022 / 2021 to rise to 14.9 billion in the next fiscal year (2023 / 2024) and 16.5 billion in 2025 / 2024.
According to the Central Bank of Egypt ’ s forecasts issued in its statistical bulletin for May, the proportion of net foreign direct investment in GDP declined to about 1.3% in the fiscal year 2020 / 2021 compared to 2% in the fiscal year 2019 / 2020, adding that it was 2.7% in the fiscal year 2018 / 2019 and 3.1% in the year 2017 / 2018.
Economist Hani Geneina predicted that the value of net foreign direct investments in the local market will exceed 10 billion dollars in the coming period, due to several different factors, including the decline in the prices of shares of companies in the stock exchange and the exchange rate of the pound against the dollar.
However, Egypt was the second largest recipient of foreign direct investment in the African continent, he said, adding that recent pledges from Gulf countries to invest about $22 billion in various sectors will boost foreign direct investment in the future.
The number of new green projects in Egypt has more than tripled to $5.6 billion, according to the UNCTAD report, pointing out that for example, the UAE real estate company Reportage announced a real estate project worth $1.5 billion.
According to the report, the volume of foreign direct investment flows to North Africa declined by 5% to $9.3 billion last year.
Geneina told Al-Mal that the flows of foreign direct investments to the markets are divided into three types, the first is the acquisition of one company on another by more than 10%, pointing out that this investment happened last fiscal year, such as the acquisition of the UAE Holding “ADQ ” on several Egyptian companies, pointing out the importance of this type of investment, but it is not very useful in the list of foreign investments.
This type of rapid investment is encouraged by the decline in both stock prices on the stock exchange and the exchange rate of the pound against the dollar, as well as the recent government stimulus measures that included the implementation of the state ownership document.
The document of state ownership announced by the government in mid-June revealed the most prominent sectors that will witness the stabilization or reduction of government investments (while allowing the participation of the private sector), a number of activities in the transport, education, mining, real estate, electricity, telecommunications and sports sectors.
Geneina said that the second type of flows is the reinvestment of a foreign company present in the market for its profits again, pointing out that this type is classified in the balance of payments as foreign direct investments.
He added that the most prominent local sectors that will go to this type of investment is oil and gas, due to the high value of its profits achieved last fiscal year, and will therefore reinvest its large financial surpluses during the current fiscal year.
He pointed out that the third type of investment is the most difficult, which is the establishment of a new company or project from the beginning, and the employment of new workers, pointing out that for example, Dana Gas announced that it will expand its operations implemented in the local market.
This area is likely to witness an increase during the current fiscal year, especially in the oil and gas sectors and related sectors, namely petrochemicals and fertilizers, especially by Gulf investments in light of the features announced recently by the government, namely the state ownership document, the gold license, as well as the large financial surpluses they have, which motivates them to invest in the local market.
In mid-May, Prime Minister Mostafa Madbouly announced a number of concessions on the industrial sector, most notably the issuance of the golden license for some projects, pointing out that it will be granted once and include three areas as a start, namely green hydrogen, electric car manufacturing and infrastructure, seawater desalination projects and renewable energy.
Geneina stressed the importance of the government encouraging foreign companies to reinvest their profits in the local market instead of transferring them to parent companies abroad by providing incentives to urge them to take this step.
According to the latest UNCTAD report, Mozambique ranked third in the list of foreign investment flows to 15 African countries last year, and its inflows rose by 68% to $5.102 billion compared to $3.035 billion in 2020, while it recorded 2.212 billion in 2019.
Nigeria ranked fourth on the list, attracting inflows of 4.844 billion over the past year, an increase of 103 percent from the previous year, the data added, adding that it recorded 2.385 billion in 2020 and 2.305 billion in 2019.
Ethiopia followed in fifth place, and foreign direct investment inflows increased last year by 79% to $4.259 billion compared to $2.381 billion in 2020.
In the sixth place came « Congo » with the volume of flows of $3.691 billion, a decline of 8% from its value in 2020, and recorded 4.016 billion dollars, followed by Ghana in the seventh place in the list and increased flows by 39% to reach 2.614 billion dollars during 2021 compared to 1.876 billion in 2020.
According to data from the UNCTAD list, foreign direct investment flows in Senegal jumped by 21% to 2.232 billion against 1.846 billion dollars in the previous comparison period.
According to the report, the value of flows to Morocco increased by 52% last year to $2.153 billion, and a major international financing deal was announced there, a $20 billion construction project for a 3,800km transmission line to the UK with a capacity of 3.6 gigawatts, sponsored by English company Xlinks.
The Democratic Republic of the Congo ranked 10th on the list, with investments up 14% to $1.870 billion compared to $1.647 billion in 2020.
Gabon came in eleventh place, with direct investment flows falling by 5% last year to record 1.635 billion dollars compared to 1.717 billion in 2020, followed by Uganda, with flows rising by 31% to 1.142 billion dollars compared to 874 million in 2020.
Tanzania ranked 13th, with foreign investment up 35 percent in 2021 to $922 million compared to $685 million in 2020.
According to the bulletin, investment flows in Algeria decreased by 24% last year to $870 million compared to $1.143 million in 2020, pointing to the decline of investments in Tunisia to $660 million compared to $652 million in 2020 to be ranked 15th.
Esraa Ahmed, a macro-economic analyst at the investment bank “Ahly Pharos ”, agrees with Geneina ’ s opinion as she expects the volume of net foreign direct investment in Egypt to rise to about $10 billion during the current fiscal year (2022 / 2023), up from levels that will not exceed $7 billion in the fiscal year ending 2021 / 2022.
She added that this rise is driven by the Gulf investment flows that have been announced recently, and the acquisition deals that we see are witnessing activity during the current period.
There are other factors that may prevent net foreign direct investment from rising to larger numbers in the near future due to the continuation of the war in Ukraine and its repercussions on the global economy.
According to Ahmed, these factors are the economic situation of the European Union, which is an important partner for Egypt in terms of trade and investment, in addition to the general reluctance globally to risk starting new projects, and the prevailing outlook for emerging markets and the risks of their currencies.
On the sectors that may witness foreign inflows during the coming period, she said that the most prominent of them are clean energy, new infrastructure driven by the expansion of the state in this field, in addition to digital financial services, and some branches of manufacturing industries.
For his part, Numan Khalid, a macro-economic analyst at Arqaam Capital, said that the current circumstances in the world prevent the possibility of predicting the volume of foreign direct investment flows in the local market during the coming period.
He added that most of the investments come from the Gulf market, especially from Saudi Arabia and the UAE, pointing out that these two countries have benefited greatly from the recent increases in oil prices, and thus have a great financial solvency through which to invest in surrounding countries, especially in Egypt, which is one of their target markets.
He pointed out that health, hotels, real estate and the financial sector will witness an increase in the volume of investment flows to them during the coming period.
During his participation in the Qatar Economic Forum last June, the Minister of Finance, Mohamed Maait, looked forward to increasing the volume of Gulf investments with the transformation of their deposits in Egypt into real investments that benefit from the promising development opportunities available in various fields.

The African Continental Free Trade Area (AfCFTA) aims to create a single market of 1.3 billion people and a $3.4 trillion GDP.

Title:

Content: Global investors waiting to pour in money in Africa to firewall China

By IANS | Published: August 2, 2021 02:09 PM2021-08-02T14:09:05+5:302021-08-02T14:25:34+5:30

New Delhi, Aug 2: After a tepid inflow of foreign direct investments (FDI) into Africa in 2020 amid the ...

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New Delhi, Aug 2: After a tepid inflow of foreign direct investments (FDI) into Africa in 2020 amid the Covid-19, investors are once again warming up to the continent. According to the United Nations Conference on Trade and Development (UNCTAD), FDI flows into Africa declined by 16 per cent in 2020 to $40 billion, from $47 billion in 2019.

China, the primary investor in the continent, has also slowed down its investments into the continent leaving an opportunity for other investors.

While the UNCTAD projected FDI inflow into Africa to grow this year, it said that the slow vaccine roll-out programme is a cause for concern. According to UNCTAD, FDI to the continent is projected to grow by only 5 per cent in 2021. But analysts said Africa as an investment destination has led to "an unprecedented curiosity" among other countries, which are now aggressively looking to mute China's dominance in the continent.

"Africa is critical in the new geopolitical and geo-economic contours. The continent, with its vast natural resources, offers a ready growth platform," an analyst told India Narrative.

According to a study published by Brookings Institution last week, Africa is home to 17 per cent of the world population. However, by 2050, it will have 26 per cent of the global population 2.53 billion people. "If Africa is not successfully integrated into the global economy, there could be a major threat to global prosperity and stability," the study said, adding that by 2050, the continent will be home to an estimated $16.12 trillion of combined consumer and business spending.

The African Continental Free Trade Area (AfCFTA) – the mega trade could give a push to intra-continental investment.

Touted as one of the biggest trade deals in the world, the AfCTA aims to create a single market comprising 1.3 billion people with a combined GDP of about $3.4 trillion.

Meanwhile, the US may have woken up late in recognising the potential of Africa but is making all attempts to make up for the lost time.

The Group of Seven or G7 has already decided to support US President Joe Biden's proposal of carving out a mega infrastructure plan under the "Build Back Better World" (B3W) initiative, expected to bring in transparency and sustainability. Besides, the initiative will be carried out only in consultation with local communities.

The G7 in its meeting in June also announced that it will increase its support to the Indo Pacific and Africa. "We resolve to collaborate with partners around the world, including in the Indo-Pacific and Africa, to actively promote these shared values for the good of all," said the statement.

India too has pressed the pedal on investments in the region. Sources said that the still-born Asia Africa Growth Corridor—the mega infrastructure project that was launched in 2017 to connect Asia and Africa must be revived.

Carnegie Endowment for International Peace noted that Chinese financiers committed $153 billion to African public sector borrowers between 2000 and 2019. "After rapid growth in the 2000s, annual lending commitments to Africa peaked in 2013, the year the BRI was launched. By 2019, though, new Chinese loan commitments amounted to only $7 billion to the continent, down 30 percent from $9.9 billion in 2018," it said.

Disclaimer: This post has been auto-published from an agency feed without any modifications to the text and has not been reviewed by an editor

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Chinese financiers committed $153 billion to African public sectors from 2000 to 2019.

European investors, led by the UK, France, and the Netherlands, are the largest owners of FDI in Africa.

Title:

Content: Chairman of the Board of Directors and Editors
I'm sorry.
Mohamad Elbaz
Chairman of the Board of Directors and Editors
I'm sorry.
Mohamad Elbaz
It has reached $11 billion.
UN highlights doubling of foreign direct investment in Egypt
The United Nations Trade and Development Board (UNCTAD) said in its annual report on foreign direct investment flows for the year 2022, on Wednesday in Geneva, that Egypt witnessed an increase in foreign direct investment more than doubled to $11 billion as a result of increased cross-border M & A sales.
Investment flows to Africa fell to $45 billion in 2022 from a record $80 billion in 2021 and accounted for 3.5 percent of global foreign direct investment, the report said, adding that international project financing deals targeting Africa showed a 47 percent drop in value.
The report pointed out that the number of announcements of new projects increased by 39% to 766, and that six of the 15 largest new investment mega projects (those worth more than $10 billion) announced in 2022 were in Africa, stressing that Egypt witnessed an increase in foreign direct investment more than doubled to $11 billion as a result of increased cross-border M & A sales.
The number of new projects has more than doubled to 161, and the value of international project financing transactions has increased by two-thirds to $24 billion.
FDI inflows have risen over the past five years in four of the continent ’ s regional economic groupings, with FDI in the Common Market for Eastern and Southern Africa (COMESA) growing by 14% to $22 billion, and inflows also rising in the Southern African Development Community (SADC) (quadrupled to $10 billion) and the West African Economic and Monetary Union (WEMU) (doubled to $5.2 billion). East African Community (up 9% to $3.8 billion).
According to the report, the largest increase in 2022 was in new field projects announced in energy and gas supply (to $120 billion from $24 billion in 2021), and the value of projects in construction and extractive industries rose to $24 billion and $21 billion, respectively, while the information and communication sector recorded the largest number of projects.
European investors remain by far the largest owners of FDI in Africa, led by the United Kingdom ($60 billion), France ($54 billion) and the Netherlands ($54 billion).

Which countries are actively investing in Africa besides China?

The UK is Africa's second-largest foreign direct investor after China, with $65bn invested.

Title:

Content: When asked for his views on diversification as a strategy for portfolio management, Warren Buffett responded, “diversification is protection against ignorance”. Instead of a diversified portfolio, the Oracle of Omaha famously prefers a concentrated one, composed of a few sectors he has rigorously studied.

The UK’s investment strategy for the African continent is seemingly straight out of the Buffett playbook. As of 2020, the UK holds $65bn in total foreign direct investment (FDI) stock in Africa, second only to China. The vast majority of the portfolio is in oil, gas, mining and financial services.

In 2022 five new oil and gas deals worth £2.1bn were struck at the UK-Africa summit. In stark contrast, just £161m (8% of the total summit commitments) were invested in clean energy. One may agree with the UK’s strategy, suggesting that there aren’t many other high-yield investments to be made other than in oil majors, legacy miners and grey-haired banks. And besides, who would disagree with Buffett’s dictum? He is the sixth-wealthiest person in the world after all.

The truth of the matter is that Buffett would not be as wealthy as he is without adapting to changes in market trends, technologies and geopolitics. In May he sold his remaining stake in chip manufacturer TSMC due to geopolitical considerations (TSMC is based in Taiwan). A concentrated portfolio does not mean a stagnant one. It is this insight that the UK is overlooking, setting itself up to miss opportunities in those new industries rapidly taking shape across the world’s youngest and most promising continent.

Two trends are shaping markets across the continent. One of these is the adoption of financial technologies and the other is increased demand for healthcare, a consequence of Africa’s population boom and rising standards of living.

Fintech sector

McKinsey, a consultancy, estimated that revenues in the African fintech sector could surge eight times their current value to $30bn by 2025. Between 2020 and 2021 alone, the number of tech start-ups tripled to 5,200 companies. In 2021, seven of the 10 newly minted African unicorns (private companies valued over $1bn) are fintechs. As more Africans get connected and as digital identification verification models mature, fintechs will scale and profits will follow.

The second sector is pharmaceuticals. As Africa’s population grows and incomes rise, more money will be spent on healthcare. Within this sector, the Covid-19 pandemic laid bare the worrisome state of Africa’s vaccine and therapeutic manufacturing capabilities. Estimates vary, but some assessments forecast vaccine demand to double in volume from about 1-billion doses now to more than 2.7-billion doses by 2040. Industries adjacent to pharmaceuticals such as logistics, packaging and protective equipment are likely to cash in on increased private and public healthcare expenditure.

There are some positive signs that the newly revamped British International Investment (BII), formally the Commonwealth Development Corporation, is adjusting its investments because of these market trends. In 2020, the BII made a $150m investment in Kelix bio, a pan-African pharmaceutical platform focusing on manufacturing and marketing. It also executed a $20m, four-year structured credit deal with Moove, a fintech company that provides customers with cheaper access to vehicles.

Risk premium

These steps are positive but they are small. Inward FDI for Africa remains pitiful. Last year set a record for the continent, bringing in $83bn. To put this in context, the City of London in 2020 hit $831bn in FDI (10 times that of a continent of 54 countries), according to the Office of National Statistics.

What to make of this all? At least two insights. First, the UK should look to new sectors, taking bold bets in companies leading the fintech and pharmaceutical sectors. The second insight is that Africa’s risk premium is overpriced. There is opportunity beyond the industries of the 20th century; one just needs to look for them.

• Nott works for a venture facility for public benefit and is based in London. He writes in his personal capacity. You can follow his writing on Twitter @TheAfricaBrief.

Picture: 123RF

Which European countries lead investment in Africa?

India is now the fifth largest investor in Africa, with 18 new diplomatic missions on the continent.

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Content: Japan, Korea and India experience to expand Africa, Taiwan and Africa entrepreneurs association
The “Taiwan-Africa Entrepreneurs Association ”, commissioned by the International Trade Bureau of the Ministry of Economic Affairs, attracted more than 130 enterprises interested in exploring the African market. The exhibition and consultation desk at the representative office showed that our company's desire to expand the African market is very hot.
The theme of the event was “The Key to Success for Foreign Investors (Japan, Korea and India) in Expanding Africa ”. The event was addressed by Wang Ximeng, Secretary General of the Foreign Trade Association, Liu William, Deputy Director of the Bureau of International Trade of the Ministry of Economic Affairs, Msibi, Ambassador of the Kingdom of Swaziland, and Chen Shu-fang, President of the Association of Taiwan Commerce. In addition, Hung Sheng Packaging General Manager Tang Jung-hung, Yi Ho Industrial General Manager Fu Yang-li, and Nam Wei Industrial Strategy Director Yang Wei-han analyze the development opportunities in Africa from their practical experience in the packaging, building materials, and textile industries.
Wang Ximeng, secretary general of the Foreign Trade Association, pointed out that in addition to the competition between Europe, America and China over the layout of the African continent, Japan, South Korea, India and other countries in Asia are committed to increasing investment and economic cooperation in Africa.
There are more than 1.3 million people of Indian descent in Africa, such as in East Africa, where more than 60% of the economic lifeline is controlled by Indians.
In addition, 18 of India's 25 newly established embassies and consulates are located in Africa, and India has become the fifth largest investor in Africa, while Japanese automobile manufacturers Toyota, Nissan, and electrical appliance giant Toshiba have already planted flags in Africa; South Korea's Hyundai, Samsung, LG and other large enterprises have also been stationed in Africa.
Through this event, we hope to help our business people to learn from foreign companies such as Japan, Korea and India, as well as African market leaders, and shorten the path to enter the African market.
Liu, deputy director of the International Trade Bureau, said that in recent years, the global economy has continued to be volatile due to changes in the international situation such as Sino-US trade frictions, global inflation, and the Russian-Ukrainian war, but Africa has shown great resilience during this period.
In addition, foreign direct investment in Africa reached US $45 billion in 2022, which has returned to the pre-epidemic level, indicating that confidence in investment in Africa has gradually recovered. In 2022, the total import and export value of Africa reached a new high in recent years, with imports reaching US $694.5 billion, up 14%, and exports reaching US $661.4 billion, up 19%. It is hoped that through the activities of the association, upstream and downstream companies in various industries can learn from each other and share their experiences, and work together to promote Taiwan-Africa economic and trade relations.
The event will be held in conjunction with AGOA, a major textile manufacturer in South China, and the representative offices of African embassies in Taiwan, Africa-related associations, and import and export banks providing trade and financial services. For more information, please visit africa.taiwantrade.com for more information.

Which Asian countries are investing in Africa?

Which countries are actively investing in Africa besides China?

India
Europe, U.S. Japan, South Korea, India

Major foreign companies such as Toyota, Nissan, and Toshiba have established a presence in Africa.

Which Asian countries are investing in Africa?

Which countries are actively investing in Africa besides China?

Japan
Europe, U.S. Japan, South Korea, India

Which sectors received the most foreign investment?

Google will invest $1 billion to support Africa's digital transformation.

Title:

Content: Optimists talk about Africa as the next economic frontier

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BY DELIA DE VILLIERS

For years Africa has been shrouded in controversy when it comes to its future potential. The optimists talk about Africa as the next economic frontier, while the sceptics point to a low growth rate, poverty and conflict as key challenges standing in the way of notable development.

Yet, the continent has grown its economy by around 5 percent a year over the past decade, is as urbanised as China and has as many cities as Europe with a population of more than one million, according to Future Agenda.

The World Bank reports that sub-Saharan Africa is “home to more than 1 billion people, half of whom will be under 25 years old by 2050”, suggesting that the workforce of the future is based here. They go on to say that Africa is a “diverse continent offering human and natural resources that have the potential to yield inclusive growth and eradicate poverty”.

While potential is not a measure of performance, what is productive is to consider the motivations of businesses opting either to enter the African market or expand operations on the continent. And that’s notwithstanding the challenges, or as Shaw Mabuto, partner at private equity firm Spear Capital, puts it: “While there are undoubtedly risks in Africa, they are well known and understood. Investors can mitigate for them.”

Spear Capital is particularly excited about the opportunities in the ESG (environmental, social, governance) space in Africa. “There are many businesses that have been able to thrive in spite of the prevailing environment and lack of government support. With the right backing, companies across the continent can grow successfully while at the same time making the world a better place and providing returns to their investors,” Mabuto says.

Google’s recent announcement of plans to invest $1 billion (R15.6bn) to support digital transformation in Africa is another very positive indicator of the potential of the continent. The investment, which was announced in October 2021, will be used to enable affordable internet access and building helpful products, for investments in entrepreneurship and technology, as well as to empower businesses as they continue or embark on their digital transformation.

This positive sentiment about Africa’s potential is echoed by a number of businesses who have chosen to expand their operations on the continent.

Picking your next market is key

When SweepSouth decided to scale their business across the African continent in 2020, they chose Kenya as the first territory to launch their on-demand home services model outside of South Africa’s borders. Three months ago they started operations in Nigeria, and plans are now afoot to expand further into Africa.

“There are so many factors that go into choosing a new market, so we decided to look at countries where people experience the same sort of home-care needs South Africans required when SweepSouth was started,” says Aisha Pandor, SweepSouth chief executive.

Kenya and Nigeria were obvious choices, representing big-market regions with a high growth opportunity, ever-increasing internet penetration and digital literacy, and the potential for positive impact on employment, education and economic growth via smart, scalable technology solutions.

“Kenya appealed to us because it felt like an in-between in terms of culture, market segment and dynamics, and also smartphone and internet penetration when compared with West Africa. And Nigeria is a really exciting new venture that we hope will serve as a base for further expansion into the West African region,” says Pandor.

West Africa, too, is increasingly recognised as an area of economic and growth interest for businesses looking to get a foothold on the continent.

Integrated PR and marketing agency Irvine Partners recently opened an office in Ghana in response to an increasing number of their global clients needing support there. The agency already has wholly owned offices in South Africa, Kenya and Nigeria, and has realised the potential of this West African country.

“Most of our clients’ interest in the region stems from Ghana’s position as a tech hub within sub-Saharan Africa and its growing financial services industry, but we’re also seeing many other industries looking to invest in and expand into the country. Strategically, it makes a lot of sense for us to have a presence in the country and we’re optimistic about its potential,” says managing director Hayley van der Woude.

Beyond the obvious

Importantly, the interest in Africa extends beyond the traditionally popular economic areas such as Lagos, Nairobi and Accra, with Mauritius serving as a prime example of potential beyond the obvious. It is currently the top-ranked economy in sub-Saharan Africa, according to the World Bank’s Ease of Doing Index and is recognised for offering a sound political and economic environment that strongly encourages investment thanks to a sophisticated banking system, a favourable tax regime and low inflation.

These are among the main reasons.

The Business Exchange (TBE), a South African-launched serviced office offering, not only expanded operations to Mauritius but also designed an investment opportunity for others with their sectional title shared office investment that offers a safe and affordable way to get into this bustling market.

“Mauritius, in our view, is fast becoming one of the hottest investment hubs on the continent. Major international brands, including Samsung, Broll, Expedia and NBA (North America’s National Basketball Association), are based at our serviced office space there, which speaks to the interest in the location and offers an indication of its dynamism as a business destination,” says David Seinker, the founder and chief executive of TBE.

Embracing innovation

Lastly, but certainly very significantly, when it comes to businesses where customer-centricity is key, such as banking and telecoms, African players compete more effectively than their international counterparts, according to a finding in the Boston Consulting Group’s digital maturity index.

“It’s also hardly surprising that these are two sectors where Africa has led the world when it comes to technology-led innovation,” says Ngadi Job Goshi, the general manager at Liferay Africa. “Ultimately, while Africa may be less digitally mature than other markets, there can be no doubt that businesses on the continent are unafraid to embrace technology and innovation. And, in the customer-centric ways in which they’ve done so, despite facing adversity and strong headwinds, there are lessons for the rest of the world in the tenacity and ingenuity birthed and nurtured in the African soil.”

Delia de Villiers is the senior account manager, Irvine Partners.

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What trends are emerging for African startups in 2022?

Which countries are actively investing in Africa besides China?

Africa's technology boom is expected to grow its Internet economy to 5.1% of GDP, or $185 billion, by 2025.

Title:

Content: Is Africa a good place to start a business?

Africa is experiencing a technology boom: the rapid penetration of Internet and mobile technologies make this region more and more interesting for IT entrepreneurs, despite the specificity and heterogeneity of the market.

IT in Africa

The African continent is a large market, as well as a source of direct access to a large audience with smartphones and a wide range of resources. The region is rich in coal, oil, ferrous metal ores, graphite, aluminum, and phosphate and consists of 54 countries, extremely diverse in terms of population, digitalization, economy, and purchasing power. Since January 2021, the continent has had a free trade zone between the countries of the African Union.

The market entry threshold is low, there is no fierce competition, and the potential for growth and demand for technology projects is enormous: the region has many problems that can be solved through innovation.

The continent has a crazy rate of Internet development and a native love of smartphones. You can buy bananas on the street and pay with your mobile account.

Students are often interested in starting their businesses. More often than not, students choose completely new locations and new startup ideas. We recommend that you consider Africa for your business because in a few years it will bring you success. But first, we recommend visiting Africa as a tourist to get a feel for the atmosphere. If you got carried away with preparing for a trip to Africa and forgot to write a research paper on time do not panic. After all, it’s no trouble, because a student service will always come to your aid. So if you’re wondering if you can pay someone to write my paper, always go to the WritingAPaper service. Its experts will help with any academic paper, and you will have time for exciting trips.

By 2025, experts predict Africa’s Internet economy should reach 5.1% of GDP – about $185 billion. FinTech, AgroTech, eCommerce, InsureTech, HealthTech, and CleanTech are considered the most in-demand areas.

According to research firm Briter Bridges, venture capital investment in African startups totaled $1.31 billion in 2021, most of which came from fintech projects. Kenya, Nigeria, and Egypt are considered to be the drivers of the region’s venture capital ecosystem: projects from these countries have received the most investment over the past few years compared with their neighbors on the continent. More than 30% of the continent’s technology hubs are concentrated here.

“The GDP of the entire region is $6.8 trillion. If Africa were a single country, it would be fourth in the world after China, the U.S., and India. Undoubtedly, the economic power of the region is still small, but in the next 30-50 years, it is predicted a stable growth in the range of 6-12% per year, and this process will be accompanied by the creation of new industries and businesses.

GDP per capita in terms of purchasing power parity in Africa is $5.2 thousand, for comparison, in the Russian Federation – $29.4 thousand, in the USA – $68.3 thousand, in Europe – about $41 thousand. However, in the top 20 fast-growing economies of the world, six lines are African countries: Benin, Ghana, Ethiopia, Tanzania, Rwanda, and Cote d’Ivoire. The main technological hubs on the continent are concentrated in South Africa, Nigeria, and Egypt.

The level of development of the IT market in Africa is 5-10 years behind other countries. Until now, only 28% of the continent’s population has access to the Internet, but in the last few years, the situation is gradually changing. Now the digital industry in Africa is actively developing, and the international market is noticing this trend.

African Accelerators & Incubators

There are more than 600 technology centers in Africa, among them incubators, gas pedals, and co-working spaces for companies. One of the most famous technology centers is the CcHUB. It is located in Yaba, Nigeria’s Silicon Valley. CcHUB boasts a rich network of 650 startups across Africa.

CcHUB partners with Amazon, and Google for Startups, Visa, and other international companies. The incubator focuses on projects in health, smart transportation infrastructure, fintech, education, and cybersecurity.

Another major center actively developing a technology and innovation startup environment is the MEST incubator in Ghana. Assistance from the Meltwater Foundation allows MEST to target startups from all over Africa at the earliest stages of development, train entrepreneurs for free, and help with product prototyping and hypothesis testing.

MEST is an educational program for IT entrepreneurs, an internal seed fund, and a network of incubators for technology startups in Africa. The hubs are located in Accra, Lagos, Cape Town, and Nairobi. The organization has been active since 2008, actively supporting programmers and engineers. One of the programs lasts a year, is designed for 60 start-ups, and is completely free. MEST has many famous partners, such as the acceleration program for fintech startups supported by the French bank Societe Generale.

In Ethiopia today, three private business incubators are systematically working with technology startups: BlueMoon, iceAddis, and iCog/Solve. The first has more AgriTech, the second has eCommerce startups, and the third has programming, including AI projects.

The iCog/Solve gas pedal hosts Ethiopia Hacks, a series of 12 hackathons in which 600 people have already participated. The project is funded by the U.S. Department of State and the U.S. Agency for International Development, with Google Developers Group (GDG) and the Center for Accelerated Women’s Economic Empowerment (CAWEE) as partners.

Here, with the support of Kenya’s Ministries of Health and Transport, the famous MSafari service was created to monitor the passenger flow of public transport.

The Cape Innovation and Technology Initiative (CiTi) is the oldest technology business incubator on the continent. Located in Cape Town and founded in 1999, it focuses on the development of IT projects. During its existence, it has helped three thousand entrepreneurs to create more than two thousand companies and continues to be actively involved in the Cape Town technology community.

iHub – each year the gas pedal supports 450 startups. The gas pedal has a wide range of programs for business startups. One of them is aimed at the development of IT projects run by women.

Startupbootcamp Afritech – runs several accelerator programs, including ASIP Accelerator Program and iNovo. Project recruitment happens all the time, and there is a virtual and offline passing format. The program is supported by Amazon, Nedbank, PwC, and other large companies. Participants have a chance to receive an investment of 15 thousand euros.

The most specialized technoparks are presented in South Africa – Technopark Stellenbosch, Highveld Techno Park, and The Innovation Hub. Notable technoparks exist in Senegal (Dakar Technopolis), Rwanda (Kigali ICT Park), Madagascar, and Zimbabwe at NUST University.

Africa, with a population of 1.35 billion, could overtake China and India in the next decade. McKinsey estimates that by 2025, the region will have 360 million smartphones and 240 million computers and laptops, and digitalization will increase GDP by $140-320 billion. Not surprisingly, such a large – and still technologically untapped – market is beginning to play an increasingly prominent role in the economic arena.

Thanks to the serious penetration of smartphones and the large percentage of the young population, the African market is becoming a convenient environment for launching and developing technological projects. A large number of fragmented states at different stages of economic development makes it difficult to create a unified startup industry in the region but does not prevent the effective functioning of individual technology hubs with which large international companies are willing to cooperate.

Localization of foreign projects in Africa is complicated by a large language group, corruption, and the specific mentality of the population, but the potential growth opportunities and lack of serious competition more than offset the possible risks.

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In 2021, African startups received $1.31 billion in venture capital investment, mainly in FinTech and other in-demand areas like AgroTech and HealthTech.

The US has proposed a mega infrastructure plan for Africa under the 'Build Back Better World' (B3W) initiative.

Which countries are actively investing in Africa besides China?

The G7's Partnership for Global Infrastructure Initiative is a $600 billion lending program for infrastructure projects in developing countries, particularly Africa.

Title:

Content: Africa Business World

Impact of G7’s multi-billion dollar plan on Africa’s infrastructure gap

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In late June 2022, it was announced at the G7 Summit in Germany that a USD 600 billion lending initiative, the Partnership for Global Infrastructure Initiative (PGII), would be launched to fund infrastructure projects in the developing world, with a particular focus on Africa.

The G7 countries – Canada, France, Germany, Italy, Japan, the United Kingdom (UK) and the United States (US) – explained the PGII would help address the infrastructure gap in developing countries.

The US

The US has recently renewed its focus on impact-building and financing strategic, long-term infrastructure projects in Africa, with the Export-Import Bank of the United States (EXIM) supporting infrastructure development on the continent. According to a 2020 report by McKinsey and Company – Solving Africa’s infrastructure paradox – the US accounts for 38% of global investors who have an appetite for African investment, by far the most of any country.

In 2021, the US launched a refreshed “Prosper Africa initiative”, focusing on improving reciprocal trade and investments that create jobs and build infrastructure between the two regions. In 2022, the US announced it would mobilise USD 200 billion over the next five years as part of the PGII, in the form of grants, financing and private sector investments. Some deals have already been announced, including, for example, a USD 2 billion solar energy project in Angola, and the building of multiple hospitals in Côte d’Ivoire.

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The EU

In February 2022, the European Commission announced investment funding for Africa worth EUR 150 billion. The funding package is part of the EU Global Gateway Investment Scheme and is said to be in the form of EU combined member funds, member state investments and capital from investment banks.

In early 2020, the European Commission published its Comprehensive Strategy with Africa, outlining the region’s plans for its new, stronger relationship with the continent. The strategy document laid out five top priorities for the EU in Africa: the green transition and improving access to energy; digital transformation; sustainable growth and jobs; peace and governance; and migration and mobility.

The UK

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The UK is also making a strong play for influence, investment and trade with Africa, post-Brexit. Further to key summits in 2020 and 2021, finance is being redirected into Africa from the UK. In 2022, UK development finance institution (DFI), British International Investment (formerly CDC Group), announced it had exceeded its pledge to invest GBP 2 billion in Africa over the last two years.

The UK’s Global Infrastructure Programme helps partner countries (including in the African continent) to build capacity to develop major infrastructure projects, setting up infrastructure projects for success and paving the way for UK companies to support these projects.

Further, in November 2021, it was announced that the governments of South Africa, France, Germany, the United Kingdom and the United States of America, along with the European Union, were in negotiations to form a long-term Just Energy Transition Partnership.

The partnership focuses on boosting the decarbonisation of the South African economy, with a commitment of USD 8.5 billion for first round financing. It is expected that 1-1.5 gigatonnes of emissions will be prevented over the next 20 years, assisting South Africa to accelerate its just transition. Discussions are also currently taking place to establish a similar partnership in Senegal.

African solutions

The African Development Bank noted in early 2022 that Africa’s infrastructure investment gap is estimated at more than USD 100 billion per year.

DFIs are increasingly anchoring the infrastructure ecosystem in Africa – serving a critical function for project finance as investment facilitator and a check on capital. DFIs can shoulder political risk and access government protections in a way that others cannot, enter markets others cannot and are uniquely capable of facilitating long-term lending.

The large amount of capital needed to fill the infrastructure gap, however, means that DFIs cannot bridge it alone. Private equity, local and regional banks, debt finance and specialist infrastructure funds are primed to enter the market, and multi-finance and blended solutions are expected to grow in popularity as a way to de-risk deals.

The African Union’s 55 member states have stated that their primary funding needs include support in terms of safety and security on the continent, as well help in implementing the African Continental Free Trade Agreement (AfCFTA) and the massive infrastructure investment it needs to be successful.

The development of supporting infrastructure is key to boosting AfCFTA’s free trade potential, especially in terms of transportation, energy provision, internet access and data services, education and healthcare infrastructure projects.

Infrastructure projects in Africa now also have a heightened focus on improving Africa’s capacity for green, low-carbon and sustainable development, via, for example, clean energy, community healthcare and support, green transport, sustainable water, wildlife protection and low-carbon development projects.

Funding such projects comes with responsibility –  projects must not only be bankable and yield attractive returns, but must also be sustainable and provide tangible benefits to local economies and communities. All of Africa’s major partners have noted they will prioritise projects that commit to Environmental, Social and Governance principles, and access to capital for large infrastructure projects is likely to contain sustainability requirements.

That the focus of the PGII is on the sustainability and the social impact of these projects in Africa is further evidenced in the White House briefing room statement issued at the launch in June 2022, where it was stated that the PGII will “mobilize hundreds of billions of dollars and deliver quality, sustainable infrastructure that makes a difference in people’s lives around the world…”

Author: Michael Foundethakis, Baker McKenzie’s Global Head of Projects and Trade & Export Finance, and Africa Steering Committee Chair

Sourced from Africa Feeds

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Ethiopia is a leading FDI destination in Africa, attracting companies like Huawei and Alibaba with its infrastructure investments.

Title:

Content: Part I: Attracting Foreign Investment into Africa may not come from the Sweet Stories we tell Foreigners

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By Edward Chisanga

I attended an Investment Forum in Utopia last week where Utopian countries had a rare opportunity to speak their minds out to foreigners who had attended in large numbers together with their Heads of State. The Master of ceremony began by introducing the private sector from rich countries present from France, UK, USA, Germany, Netherlands, and others from the EU membership before turning to the Utopian Heads of State and their groups.

What Foreign Investors Heard

Then he called upon one Utopian Head of State to speak on behalf of all the fifty-five African countries in attendance to list compelling factors that would captivate foreign investors from rich countries to go and invest in Africa.

The President began, “Africa is a huge piece of land, most of which is underutilized. All the countries that I represent here boast of huge land available for you investors. Come and invest in Africa, the continent of the future.” Then the President turned to one of the Presidents in his group and allowed him to speak about his country’s promotion of investment.

“Zambia has one of the most open trade environments in Africa and is a member of the Southern Africa Development Community (SADC) and the Common Markets for Eastern and Southern Africa (COMESA). Businesses in Zambia benefit from one of the lowest profit taxes in the region. Increasing regional cooperation through multilateral organisations, including SADC and the African Union should continue to reduce the likelihood of interstate conflict.” Then he highlighted ‘Some of the government incentives to FDI as:

  1. Dividends paid out on farming profits are exempt for the first five years of activity.
  2. Initial allowance of 10% on capital expenditure incurred on the construction or improvement of an industrial building is deductible.
  3. Foreign exchange losses of a capital nature incurred on borrowings used for the building and construction of an industrial or commercial building are tax deductible.
  4. Income earned by companies in the first year of listing on the Lusaka stock exchange qualifies for a 2% discount on the applicable company tax rate in the particular sector. However, companies with more than 1/3 of their shareholding in the hands of Zambians qualify for a 7% discount.
  5. Implements, machinery and plant used for farming, manufacturing or tourism qualify for wear and tear allowance of 50% of the cost per year in the first two years of activity.

He continued, “Investors who invest at least USD250,000 in any sector or product not provided for as a priority sector or product, is entitled to non-fiscal incentives such as investment guarantees and protection against state nationalization and protection against non-commercial risks (Zambia is a signatory of Multilateral Investment Guarantee Agency).”

Then the moderating African President turned to South Africa’s President and gave him the floor. President Cyril Ramaphosa was quick and went straight to the point by referring his audience to his weekly newsletter output, ‘From the Desk of the President,’ and repeated the points he recently made in the United Kingdom, “Government has a bold vision to be a destination of choice for foreign direct investment and this requires far-reaching reforms. These include reducing the cost of doing business for both large and small businesses, improving the quality of South Africa’s institutions, enhancing administrative efficiency and governance systems.”

When the turn of the Ethiopian Prime Minister came, he repeated what he had said at the 2019 Davos Meeting in Switzerland, “Investment in infrastructure has contributed a lot to the growth and attracted FDI, making Ethiopia one of the leading FDI destinations in Africa.”

Based on what the three African countries presented as their selling points to attract FDI, the President speaking on behalf of Africa retorted, “The three African countries that have just spoken present a strong representative basis for me to conclude that Africa is ripe and ready for FDI. “You have heard yourselves from the horses’ mouths,” He proudly said. “There’re similar incentives in Rwanda, Benin, Lesotho, Burkina Faso and all other countries. It’s time for you to come and invest in Africa.”

What Foreign Investors do not hear.

Despite the repeated sweet stories coming from African leaders, there’re equally important things that Foreign Investor don’t hear but that they are aware of.
About Zambia, an UNCTAD Investment Report reports, “Zambia’s infrastructure, whose poor quality is a barrier to investment, should be strengthened by investments in the road network, railways and the construction of power plants. In 2021, a USD 11 billion standard gauge railway project was announced in Zambia, involving US capital, which would expand essential transport links with the outside world. The regulatory environment does not favour entrepreneurial activity, the requirements for commercial licenses being long and costly, and the application of regulations not being uniform. In addition, the protection of property rights and the enforcement of contracts are still weak by international standards.”

As the author of this article is a Zambian living in Zambia, he is aware of the challenges coming the country’s energy sector. We have loadshedding in Zambia which Foreign Investors are aware of. They’re aware that the Mining sector, the country’s brain earner depends on use of energy, yet it is not exempted from malady of shortages. Equally, they know how much Zambia’s private sector suffers from energy shortage and its effect on business.

In South Africa, despite sweet stories, except only in 2021inward FDI flows have been declining significantly since 2010 as Figure 1 below shows. Even if this dwindling trend were to be attributed to other factors, the deteriorating energy situation in South Africa is playing a multiplier effect on FDI and the overall economy. Yet, South Africa like other African countries’ Heads of State turn a blind eye on the matter. As for many other things going unwell, they simply don’t tell the truth about the energy crisis.

In Ethiopia, Laments Omer Redi, “The crisis in the power supply has reached such a critical point that blackouts now occur every other day.” Fortune adds, “It is obvious that Ethiopia is now in such a serious power crisis that it has been forced to introduce load shedding.” There are other voices no longer silent. Said Kevin Daly of London based investment company, “Ethiopia is uninventable now. The political situation is very tenuous, and there is a lack of information and clarity on the economy, and on how things are going to be resolved.”

Concluding

Policy coherence is defined by the OECD as, “The systematic promotion of mutually reinforcing policy actions across government departments and agencies creating synergies towards achieving the agreed objectives.” The wonderful incentive packages must be complemented with other key inputs to build a whole.

For example, just as a motor vehicle cannot move smoothly if one key part falls off, you cannot attract adequate FDI with a list of incentives only when the energy sector, upon which industry depends is in crisis. Fix energy, infrastructure, human skills, corruption, rule of law, security, etc to arrive at a complete package of what attracts FDI. FDI goes to Asia because there’s no infrastructure, human capital, or energy crisis.

All these are well built. Asia also has bigger land than Africa. We cannot keep on using obsolete factors that are abandoned by others to attract FDI. It’s like always saying, “Come to Zambia and see the Victoria Falls.” Foreign Tourists now go to beautiful cities without dust, simply to visit, feel safe and talk to honest and humble citizens with Asians largely qualifying in almost all these. Our cities, including Livingstone, are not ripe for serious tourism that builds wealth.

Foreign Investors or tourists are not our uncles on whose shoulders we will simply cry and await their positive response. They will not come simply because we are democratic and shout that Zambia is ready for business. They are not cajoled by sympathy or simply because Zambia’s leadership change occurs smoothly. They have not come since change from Kaunda to Chiluba or Chiluba to Banda or Banda to Sata which were all peaceful and democratic. We must understand what their needs are. If we don’t provide, they’ll go to Asia.

Which sectors are Chinese investments in Africa focusing on?