Isabelle Alenus-Crosby
A growing number of African countries are rapidly joining the ranks of prominent investors across the continent.
According to the International Finance Corporation (IFC), the rate of FDI projects from emerging markets has grown at a healthy compound rate of over 21% since 2008 (triple the amount from developed markets). The top investors were still India, the United Arab Emirates and China at the start of 2013, but intra-African investment has become very impressive since then. Nobody knows Africa better than Africans, and continued political stability across the continent is making them trust their own. The beauty is that increased economic stability and growth is allowing them to help accelerate the African success story through rapidly increasing cross-border investments.
SA has been at the forefront of the growth in intra-African trade but Kenya, Ghana and Nigeria are also investing heavily this year. From 2014, it is expected that countries like Angola and Mozambique will join their ranks.
The star performers, so far, in 2013, are Ghana, Nigeria, Cote d’Ivoire, Kenya, Tanzania, Zambia, Mozambique, Mauritius, Ethiopia, Namibia, Botswana, Angola and South Africa.
THE World Bank’s investment arm will increase lending to sub-Saharan Africa by up to a quarter in 2014 as private sector companies continue to flock to the region. The IFC is expected to make new investments of USD 5bn and Japan will provide USD 2bn worth of financial support over the next five years to back Japanese-owned development projects on the continent. Europe and the United States are also expected to increase their investments dramatically according to the World Bank, which sees Sub-Saharan Africa’s GDP accelerating to almost 6% over three years, driven by investment and commodity prices.
Roughly half the IFC’s annual lending in the region goes to financial markets and institutions to help improve the flow of credit to smaller businesses, which employ most of Africa’s workers. Another third goes to infrastructure projects and natural resources investments. The expanding sets of SMEs is bringing real economic diversification and are giving rise to internationally competitive companies, thereby providing access to global markets, and consequently higher wages and salaries. This, in turn, leads to the rapid growth of the middle-class and further political stability.
Even the most cautious investors have to admit that all the excitement surrounding Africa is grounded on solid analytical soil. The evidence might be that within a decade Africa will be its own biggest investor. I honestly cannot wait.