SA & Kenya ranked second in EY Foreign Direct Investment report
05 Jun 2017
EY’s Africa Attractiveness Index reveals that foreign investors gravitate to larger, more diverse economies.
South Africa and Kenya have been named as this year’s second-most attractive investment destinations in EY’s Africa Attractiveness Index 2017 (AAI 2017). Morocco has taken first place. The AAI judges 46 African countries on six areas when determining how each country attracts foreign direct investment. “Over the past year, foreign investors tended to gravitate toward the larger, more diverse economies in Africa. These include South Africa in the south, Morocco and Egypt in the north, Nigeria in the west and Kenya in the east. Collectively, these markets attracted 58% of the continent’s total FDI projects in 2016.”
Kenya ranked high in areas concerning long-term prospects for governance and human development (16 points out of 20) and infrastructure and logistics (16 out of 20). The east African country ranked adequately on economic diversification (10 out of 20), while its business environment rating was pegged at 10 out of 20. EY’s report says that even though foreign direct investment dropped by 57.9 percent, on a longer-term perspective, FDI flows into Kenya have tended to ebb and flow year-on-year. “Our confidence in Kenya’s investment prospects remains firm, underscored by the country’s strong ranking as the second most attractive FDI destination on the AAI 2017.”
EY says South Africa continues to lead Africa’s FDI and that the country is the region’s largest intra-regional investor. “There was a strong pickup in FDI activity in the consumer products and retail (CPR) sector, where projects more than doubled from 19 in 2015 to 41 in 2016. Even as its economy remains under pressure, South Africa retains its appeal as a launch pad for growth across the continent.”
Morocco came out tops by retaining investor confidence and ensuring a stable administration despite the Arab Spring. “Morocco has increasingly marketed itself as an export base for Europe, Africa and the Middle East. The country’s automotive sector has especially attracted investor interest, with FDI projects increasing from 5 in 2014 and 10 in 2015 to 14 in 2016.”