In terms of future trends, investors have highlighted the agricultural sector as having the greatest potential for growth in the next two years.
Chinese FDI in the country has also been focussed on infrastructure and mining. As a result of this investment, Tanzania aims to become a net exporter of liquefied natural gas LNGagricultural produce, minerals and industrial manufactured products. You may also like. In Zimbabwe, there is the indigenisation and domestic empowerment legislation in place, particularly for mining and financial services businesses, which has been widely criticised as creating uncertainty for investors.
In Nigeria, a new regime is in place to encourage investment into the infrastructure sector through new fund structures under wider powers of the Nigerian SEC. It is important for foreign investors to approach investment into Africa on a country and sector specific basis, identifying the key legislation that is designed to encourage them to invest or to protect the domestic market.
Besides trade and FDI, Chinese Fdi in africa and state-related entities have financed and built many infrastructure projects across the continent, including ports, roads, railways, dams, telecom networks.
Notwithstanding local content legislation, across the continent, Fdi in africa is in place to award the national oil company a stake in exploration assets to seek to ensure that the state benefits from exploitation of its natural resources.
The key sectors being invested into from the UK are business services, financial services and telecommunications.
There are also a range of double-tax treaties with a number of African countries specifically designed for investors to utilise when structuring their investments to promote greater tax efficiency. This is most evident in Nigeria with the passing of the Local Content Act infavouring domestic investors or partners by restricting new investment by foreigners to existing joint ventures or new PSCs.
Due to its cultural and historic ties with Africa, France has been a key investor in the continent and the country was the third most active investor by projects between andwith projects. The Nigerian Petroleum Industry Bill is set to have wide-ranging changes but this has not been implemented for a number of years while national debate and infighting on the split of revenues and power sharing continues.
The report also states that the China-proposed Belt and Road initiative to rebuild the ancient Silk Road trading route could prove to be a win-win situation for both China and Africa.
Under the legislation, investments can be made in foreign currency or using imported capital, however information on transactions must be filed with the Central Bank of Nigeria by an authorised dealer within 24 hours who will then issue the investor with a certificate of capital importation.
Last year also saw retail and consumer products overtake financial services to become the second most attractive sector in Africa. Of course trade is much larger than FDI and the figures exclude usual credit lines. Nigeria also has the Nigerian Investment Promotion Commission Act and other measures such as Export Free Zones to encourage international investors, but these are not without their shortcomings.
Such agreements have already led to major FDI projects in Africa.
The report also states that Chinese FDI into Africa is well diversified across various sectors, covering resource-oriented ones as well as services and manufacturing. FDI hotspots Foreign investments in Africa have traditionally been focussed on a small number of target jurisdictions, with South Africa and Nigeria being the top destinations.
The data released by EY, a London-based headquartered professional services firm, also reveals diversification of Chinese investment across more countries, covering both resource-rich nations, such as South Africa, Nigeria and Angola and agricultural exporters such as Kenya. Other countries which have received significant foreign investment include Ghana, Uganda and Zambia.
The report indicates that injobs created from Chinese FDI projects hit an all-time high more than double the number in and above three times the number of jobs created by the next biggest investor, the United States.
Key sectors Although investors have typically favoured natural resource assets, there has been a substantial shift away from the extractive industries and the continent is seeing growing investment in other sectors.
Equally, there is also legislation in place across the continent to encourage foreign investment, whether by way of tax breaks or specific legislation to address investor concerns.
Legal and regulatory highlights As Africa continues to develop as an investment destination, greater emphasis will be placed on domestic and international regulation seeking to facilitate greater FDI levels whilst at the same time protecting national interests where required.
FDI projects in real estate, hospitality and construction have increased whilst the mining and metal industries fell outside the top ten sectors when measured by FDI project numbers.THE AFRICA INVESTMENT REPORT AFRICA IN FOCUS 2 n FDI into Africa increased by 64 percent to $87bn, while the number of FDI projects declined by 6 percent to in n Coal, Oil & Natural Gas was the top sector in the region by capital investment accounting for 38 percent.
2. WHY FDI IS SEEN AS IMPORTANT FOR AFRICA The Economic Report on Africa by the United Nations Economic Commission for Africa advocates that FDI is the key to solving Africa’s economic problems.
Bodies such as the IMF and the World Bank have suggested that attracting large inflows of FDI would result in economic development. Africa has long benefited from significant inflows of foreign direct investment from China. Currently, more than US$16b of China’s portfolio of global FDI is based in Africa, with an increase in FDI from US$m in to US$b in (according to the Chinese Ministry of Commerce).
The potential attractiveness of South Africa is high, compared to other countries in the region, but its performance is relatively weak for FDI attraction, despite progress owing to investment potential in infrastructure.
However, the country leads in.
The report’s section on Chinese investment in Africa in particular highlights the growing number of African FDI recipients and the increasing diversification of. Chinese investment in Africa has increased dramatically, making the country the single largest contributor of foreign directive investment (FDI) capital and jobs in Africa inthis is according to Ernst & Young’s (EY) latest .Download