By Rob Starr, Content Manager, Big4.com
According to Ernst & Young’s Africa by numbers: Assessing market attractiveness in Africa report, foreign direct investment (FDI) into Africa has increased significantly over the last decade and this trend is set to continue, but the decision on where to invest in this vast and diverse continent can prove challenging.
The lower risk, higher reward quadrant is clearly the most attractive, offering a stable business environment and high potential for growth. Despite recent events, South Africa stands out not only for its positive risk rating, but also because of the size of the economy and overall market, as well as ongoing investments being made in fixed capital assets.
Ghana is also prominent in this category, with its high economic growth rates (boosted by recent oil production), political stability and an environment that is generally conducive to doing business.
Regional integration is key to promoting greater levels of regional investment and trade as it will make it much easier and more efficient to conduct cross-border business. It will create markets with greater critical mass, coherence and density of economic activity. However, regional integration and its benefits will only be realized by sufficient investment in infrastructure, both to connect markets and generate enough electricity to support the development of manufacturing and other industrial sectors.