africa Economy Egypt FDI Kenya Morocco Nigeria

Opinion: Foreign Direct Investments in Africa

Africa has always been attractive for foreign investors however; the continent’s political risk and governance often deter many investors from conducting business. Investment opportunities within the continent are many, it goes without saying extractive industries and agriculture dominantly drive Africa’s growth. The technology sector is slowly becoming significant and has played a key role in tackling challenges faced by the continent.

In my view, South Africa and Egypt continue to be the top two destinations for foreign direct investments. The stability in Egypt’s political and economic spheres in the last few years has help to increase direct investments in the country, particularly in the oil and gas sector. In the 2016/17 fiscal year, Egypt attracted $7.92billion from $6.93billion in the previous year. As for South Africa, foreign direct investments fell by 41% in the 2016/17 fiscal year, likely to have been triggered by political uncertainty and a slump in global commodity prices.

On the other hand, countries such as Kenya, Nigeria and Morocco have emerged as contenders to attract FDIs of the same size as South Africa and Egypt. Although, Rwanda’s FDI inflow is rather small compared to South Africa, the country’s approach in attracting foreign investors has been so far progressive. Kenya’s booming technology sector has increased foreign investors’ appetite and the demand for technology continues to grow in the country. As a result, the Kenyan Government provided tax incentives for foreign investors in the technology sector. Several South African companies such as MTN have even expanded their operations into Kenya. U.S-based tech companies such as Oracle have also taken interest in the East African country.

Emmanuel Chilamphuma is a Senior Analyst at Edgebold Capital

One comment

  1. Hie Emmanuel, whats your take on Botswana’s recent emergence as a preferred investment destination in Southern Africa? And also how do you think Ethiopia’s China-backed Infrastructure boom will impact the geo-political aspects of FDI in that economy? Thanks for the opinion article, and I’m looking forward to hearing from you.

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