Nigeria leads South Africa, Angola on $40.6b FDI

Foreign Direct Investment (FDI) inflows to Nigeria, South Africa and Angola may average $40.6 billion yearly over the next five years, a report by Ernst & Young, global accounting firm has said.

It polled 505 global executives, and 60 per cent said their perception of Africa as a business destination had improved over the past three years. Nearly three quarters said they believed Africa would become more attractive to potential investors over the next three years.

A report on global capital inflows, said as African oil and mineral reserves draw investors from emerging and developed markets. Around a quarter of a million new jobs are likely to be created in the three countries as a result.

It was noted that majority of the foreign investors are targeting the Nigerian bond market where there is sovereign guarantee and improved returns compared to other developed countries. There has also been a strong portfolio inflow to the high yields on local-currency debt, including 91-day Treasury bill which was 14 to 15 per cent.

Intra-African investment has also been a significant driver of growth, with Kenya, Nigeria and South Africa among the top investors into the rest of the continent.

Nigeria topped the list of countries expected to draw significant funds over the next five years, with the report forecasting an average of $23 billion per year in FDI inflows and around 95,000 new jobs. But recent militant attacks in the continent’s top oil producer, which has been the largest African recipient of FDI over the last decade, could deter some investors, it added.

FDI inflows to South Africa were projected to average $10 billion a year, generating up to 125,000 new jobs, compared with $7.6 billion a year and 30,000 new jobs in Angola.

Ernst & Young said more regional integration and increased investment to close an infrastructure gap, which will require an estimated $90 billion yearly, would boost Africa’s standing among investors.


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