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"MADE IN AFRICA - FOR AFRICA"
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"MADE IN AFRICA - FOR AFRICA"
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ONLY 3% INVESTMENT INTO AFRICA
Engineering News Online - June 2006
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ONLY 3% INVESTMENT INTO AFRICA
Speaking at the third Africa Investment Promotion Agency Network (AfriPAnet) meeting, on Monday, South Africa’s trade and industry deputy minister Rob Davies said that foreign-direct investment (FDI) in Africa had not reached its full potential, and that the continent was lagging behind other continents, such as Asia.
He said that FDIs, which was important for the growth of developing countries, had largely been concentrated around the oil and mining sectors and that this raised concerns regarding the continent’s dependency on commodities.
Meanwhile, the World Investment Report 2005 also showed that the bulk of 2004’s investment into Africa, some $18-billion, was directed towards natural-resource exploitation. It said that the investment was also only in a few resource-rich African economies and other countries and sectors did not play much of a role in the investment considerations of transnational corporations (TNC).
However, Davies told Engineering News Online that investment-promotion agencies (IPAs) should focus on broadening the scope for investment in Africa, adding that the investment opportunities in the agribusiness and manufacturing sectors should be further exploited.
Through IPAs, the continent could establish a partnership with Asia, which, over the last few years, established a greater presence across the continent. Davies also said that Africa could learn from Asia on how to attract FDI and that a mutually-beneficial partnership with Asia could also explore the possibility of increasing FDIs in that country.
Meanwhile, the New Partnership for Africa’s Development’s (Nepad’s) Karim Khalil told the meeting that the continent was taking “major steps” in securing its own future.
Last year, Africa realised an average growth rate of 4,9%– the highest in 50 years – and the Organisation for Economic Cooperation and Development forecast a growth rate of 5,8%, for 2006, and 5,5%, for 2007.
The latest Unido Africa Foreign Investor Survey was also launched on Monday, at the AfriPAnet meeting, and focused strongly on the emerging importance of South-South FDI, especially of South Africa, other sub-Sahara African countries and Asian countries.
The survey said that the continent was preparing itself for a new generation of growing, high-quality, value-creating investors, which were not part of large multinational corporations.
The survey, which was conducted among 15 African countries, said that Asia represented a new generation of investors in sub-Sahara Africa and that it made significant contributions to growth and employment. Asia also reported the highest expected future employment rate and anticipated to add more than 10 000 new workers a year, for the next three years, and that it was addressing the employment-generation requirements of many African countries.
The second-fastest-growing group were firms from other sub-Saharan Africa countries, which were investing for the longer term, as they spend above average on training, have the proportion of graduates in the workforce, consistent sales record and above-average employment generations.
Meanwhile, South African investors were regarded as the group that spends the most on training, has the most linkages to local market agents and pays the highest wages, which, the survey suggested, corresponded to the high skills and capital intensity of South African firms.
Firms in the South African investor group were mainly very large, rapidly-expanding service companies, particularly in the financial services and telecommunications sectors, which in terms of sheer size, investment levels and growth, had dominated the scene very quickly.
However, foreign investment from large TNCs, mainly from Europe, remained important in Africa and were the major users of local content, paid employees above-average wages and the service companies employed a large number of local graduates.
The negative aspect of this group was that the majority seem stagnant and most probably could not grow by acquisition because of their dominant market position.
Africa only attracted three per cent of last year’s international investment, which was less than a third of what one Asian country, India, attracted during the same period, a senior government official said.
Engineering News Online
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