fbpx

Who’s Making And Getting Most Foreign Investment In Africa?

Who’s Making And Getting Most Foreign Investment In Africa?

From Nasdaq. Story by Dan Crimmins, co-founder of Crimmins Wealth Management LLC in Woodcliff Lake, New Jersey, U.S.

Foreign investments in Africa hit a record $80 billion in 2014, with emerging market countries continuing to show a strong interest in African assets.

Investors from the U.S., the U.K. and France hold the biggest share of African investments: $178 billion in 2012, the latest data available. Chinese investors held nearly $28 billion in assets, a trend likely to continue as Chinese labor gets more expensive for manufacturers; investors from Brazil, Russia, India and South Africa also hold large portions of the foreign-investment total.

While the majority of investments flow to six African nations that represent a third of the continent’s population, over time the additional 48 countries may also see additional investments. The two largest destinations for investors are South Africa and Nigeria, which have the two largest economies. (Nigeria just completed a peaceful election that with luck will help combat the threat of the militant Islamic group Boko Haram.)

The good news: Although a lot of the investments so far focused on the resource-rich African states, a recent report from the African Development Bank, the U.N. Development Programme and the Organisation of the Economic Co-operation and Development noted that more manufacturing and service projects will appear in more of the continent.

Manufacturing jobs in Africa come from China, of all places. Just as countries such as China were the low-cost producers for many large international conglomerates in the 1980s, more once-emerging nations are exploring setting up shop in Africa. The stubborn global recession prompts many manufacturers to look for even lower cost producers; Ethiopia, Kenya, Rwanda and Tanzania are all trying to attract these jobs.

These countries must of course deal with the same issues that other emerging-market nations dealt with 30 years ago: training the workforce, establishing reliable energy supplies and upgrading necessary infrastructure to transport manufactured goods.

The International Monetary Fund predicts the sub-Saharan growth – that is, in 29 African nations south of the Sahara Desert – will be 5.8 percent this year. (One challenge of gathering such information: getting reliable data about the economic activity in these countries, as past methods to capture the gross domestic products widely under-reported growth.)

Read more at Nasdaq.