Later this summer the first ever African Leader’s Summit will bring heads of state from across the continent to Washington DC to discuss a range of trade and investment matters. A recent study on the attitudes of multinational corporations toward investment in Africa suggests that the leaders looking to attract investors will receive a warm welcome.
Research by the advisory firm Frontier Strategy Group confirms that investment interest by multinational corporations is not just growing rapidly, but is also expanding beyond the traditional extractive industries to other fast-developing sectors in Africa. The Frontier Markets Sentiment Index, which the group created for the Wall Street Journal, collects information from roughly 200 companies to track investment interest in frontier markets. The survey shows strong and growing interest in Africa:
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Nine of the twenty countries worldwide attracting the most investment interest from multinational companies are in sub-Saharan Africa.
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The top ten countries for greatest investment interest include Nigeria (1st), Kenya (5th), Angola (6th), and Ghana (9th).
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African countries also saw some of the strongest positive changes in investment sentiment over the past year. Kenya, Nigeria, Ethiopia, Tanzania, Cote d’Ivoire, Angola, and Zambia all posed significant increases in investor interest.
These results come as no surprise. Foreign investment in Africa is booming. But the survey also reveals other equally interesting and important trends:
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While investment in major petroleum exporting countries (Nigeria and Angola) remains strong, they are being joined by countries that offer opportunities beyond extractive industries (Kenya, Ethiopia, Tanzania).
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The rise of Ethiopia is particularly noteworthy. Long seen as cool to foreign investment, the Ethiopian government more recently has made concerted efforts to attract investment, including through the five-year Growth and Transformation Plan, which focuses in particular on attracting investment in the infrastructure and energy generation sectors. We have previously written about the success of Ethiopian Airlines thanks in part to improvements in infrastructure.
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Continued violence in Nigeria’s northern states does not appear to have deterred investors. Positive sentiment toward investment in Nigeria grew, even as international media focused on the abduction of 276 schoolgirls by Boko Haram this past April.
In short, the study confirms that there is more interest, by more investors, in more African countries and sectors than ever before.
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