Tanzania has been mentioned among African countries whose share of global Foreign Direct Investments (FDI) has grown over the past five years, which highlights growing interest among foreign investors.According to Ernst & Young’s third Africa Attractiveness Survey released on Monday, Tanzania joins Ghana, Nigeria, Kenya, Zambia, Mozambique, Mauritius and South Africa, whose FDI projects have grown at a compounding rate of 22 per cent for the last five years.
The study analysis indicates that in 2012, there were over 800 active infrastructure projects across different sectors in Africa, with a combined value in excess of US$700 billion, the large majority of projects related to power 37 per cent and transport 41 per cent.
“The latest data shows that despite a fall in project numbers from 867 in 2011 to 764 in 2012 in line with the global trend, project numbers are still significantly higher than anything that preceded the peak of 2008.
And the continent’s global share of FDI has also grown from 3.2 per cent in 2007 to 5.6 percent in 2012,” reads part of the report.The report combined an analysis of international investment into Africa over the past five years with a 2013 survey of over 500 global business leaders; about their views on the potential of the African market.
Mining and metals according to the report is still perceived by survey respondents as the sector with the highest growth potential in Africa.Other sectors where there has been a noticeable shift include ICT (14 per cent, up from 8 per cent last year, financial services (13 per cent, up from 6 per cent last year and education, which has come from virtually nowhere to register 10 per cent this year.
However, the report highlighted, there still remains a stark perception gap between those respondents who are already doing business in Africa versus those that have not yet invested in the continent.
Eight-six per cent of these business leaders believe that Africa’s attractiveness as a place to do business will continue to improve. They rank Africa as the second most attractive regional investment destination in the world after Asia.
Ernst & Young attributes the recorded economic milestone as a process of democratisation that has taken root across much of the continent and ongoing improvements to the business environment.
Others are exponential growth in trade and investment and substantial improvements in the quality of human life, all providing a platform for the economic growth that a large number of African economies have experienced over the past decade.
In the period since 2007, the rate of FDI projects from emerging markets into Africa has grown at a healthy compound rate of over 21per cent, in comparison to investment from developed markets that has grown at only 8 per cent.
Kenya and Nigeria have also invested heavily but it is expected that others such as Angola, for example, with a US$ 5b sovereign wealth fund, will become increasingly prominent investors across the continent over the next few years.
“There is a growing confidence and optimism among Africans themselves about the continent’s progress and future,” Ajen Sita, Ernst & Young’s Africa Managing Partner said, when commenting on the report.
However, the report cite transport, electricity and logistics infrastructure as well as corruption as some of the serious impediments affecting rapid FDI growth in the continents, but noted with some satisfactions that moves are being made to help allay fears of investors.
Recently, the World Trade Organisation (WTO) also hailed Tanzania as one of the Sub-Saharan countries currently doing well in easing costs of doing business and trade facilitation efforts.
Source: The Daily News, reported by Pius Rugonzibwa
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