Original post on Developed Africa
It’s always an exciting time of the year when the Ernst & Young Attractiveness Survey for Africa comes out as it offers some fascinating narratives about how Africa might be going forwards and how it might be going backwards. That being said, it is pretty long and number filled so I thought I’d do a brief highlight reel for the
lazy busy people out there.
Seriously though, do read it if you get the chance – here’s the link.
The 2012 edition of the Survey focused on the huge jump in foreign direct investments (FDIs) in Africa – up 27% from the original survey in 2010 – and stressed that, despite the criticisms, the narrative surrounding the continent’s rise should be told “more confidently and consistently”. The new edition continues this bullishness, it’s Executive Summary titled, “Africa’s rise is real”. Ernst & Young focus on economic facts and dismiss any scepticism out of hand – this growth is consistent, it is diverse and it should be celebrated.
The story is not totally one-sided, however, as FDIs have decreased in the last year despite the ongoing rise in global esteem that the continent seems to be going through. Greenfield FDI projects were down 12% from 2012 – although, that is in a global context where all such projects were down 15%. There are other issues, too, such as the perception of conducting business in Africa. Again, despite Africa’s rise, many foreign investors remain unwilling to do business there. As it states on page 5,
However, the big take away for us from this year’s survey is the stark and enduring perception gap between those respondents who are already doing business in Africa versus those that have not yet invested in the continent… those with no business presence in Africa are far more negative about Africa’s progress and prospects. Only 47% of these respondents believe Africa’s attractiveness will improve over the next three years, and they rank Africa as the least attractive investment destination in the world.
As Developed Africa recently highlighted, the potential of African business is being severely limited by the lack of proper communication about how much commercial potential there is. Developed Africa seeks to directly combat that so do check out our homepage for more.
The good news is that the percieved attractiveness of various sectors in Africa has improved allowing for more diverse business models. As stated on page 41,
There has been a marked shift in perceived sector attractiveness; resources remain top of the list, but not by far, with infrastructure and some of the service sectors gaining considerably in prominence
Previously unheralded sectors like Education, ICT or Financial Services have become hugely more attractive, complimenting the long standing interest in commodities and energy related projects in the region. This is a terrific opportunity for entrepreneurs and established businesses alike to move into new and exciting ventures.
The survey ends with a section focused on how Africa can continue to grow in the next year. The first point this section makes is to stress the vital importance of FDIs to the region. These act as catalysts for intra-continental trade, improvements in infrastructure and job creation. Africa has the largest employable population in the world and will continue to grow with or without foreign investors. However, it will grow faster and more effectively with the injection of funds and the creation of international commercial partnerships.
The conclusion on page 64 puts it neatly,
Business has to be viewed as an essential partner in driving the growth and development agenda.
I threw in that Eric Hersman talk as it fits E&Y’s bullish narrative and who doesn’t need an excuse to watch it again?