Foreign direct investment
(FDI) is welcomed and, indeed, actively sought by virtually all African countries. The
contribution that FDI can make to their economic development and integration into the
world economy is widely recognized. For this reason, African countries have made
considerable efforts over the past decade to improve their investment climate. They have
liberalized their investment regulations and have offered incentives to foreign investors.
More importantly, the economic performance of the region had substantially improved from
the mid-1990s.
However, the expected surge of FDI into Africa as a whole
has not occurred. Too often, potential investors discount the African continent as a
location for investment because a negative image of the region as a whole conceals the
complex diversity of economic performance and the existence of investment opportunities in
individual countries. |
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While the problems many
African countries face are widely known and dominate the perceptions of the continent as a
whole, there are a number of positive aspects that, although highly relevant for foreign
investors, are little known. Most African countries have substantially improved their FDI
framework, and a number of them have already attracted significant amounts of FDI, in
absolute or relative terms, or both, from an increasing number of home countries,
including developing countries. In addition, FDI in Africa is no longer concentrated in
the traditional natural resources sector, but also manufacturing and services industries
have received considerable amounts of FDI in recent years. It has proven to be highly
profitable and fairly consistently so over time. Direct investors need therefore to
differentiate. They need to look at Africa country by country, sector by sector, and
opportunity by opportunity. As in other continents, there are profitable investment
opportunities to be found. |
