To coincide with the launch of the World Economic Forum in Cape Town, South Africa, the global auditing and consulting firm, Ernst & Young, released a survey of global executives that predicts rapid and sustained growth on the African continent.
The survey of more than 562 global executives, called "It's Time for Africa," predicted that foreign direct investment (FDI) into the continent would reach $150 billion by 2015 from $84 billion in 2010 and would be driven by strong growth in new projects from next year. 42 percent of the executives were considering investing further in Africa while an additional 19 percent confirmed maintaining operations in the region.
The report said that Asia was the only continent ahead of Africa in terms of investors' perceptions.
Key sectors targeted by investors include consumer products, construction, telecoms, financial services, and mining and metals, which is perceived to have the highest growth potential over the next few years.
The report also projected GDP to grow to $2.6 trillion by 2020 from $1.6 trillion in 2008, and consumer spending to increase 62 percent to $1.4 trillion over the same period.
The survey showed emerging market investors were positive about Africa's attractiveness, viewing the region as critical to their own growth. Investment by African countries within Africa grew by 21 percent between 2003 and 2010. However, developed markets investors, particularly those in Europe, were cautious, saying that the region still needed to develop further.
The report showed that the African growth story can be traced to economic and regulatory reform that has occurred across much of the continent since the end of the Cold War. During this period, inflation has been brought under control, foreign debt and budget deficits have been reduced, state-owned enterprises have been privatized, regulatory and legal systems have been strengthened, and many African economies have opened up to international trade and investment.
Investment success stories are spread across the continent. Ten African countries attracted 70 percent of the new FDI projects in Africa between 2003 and 2010 (South Africa, Egypt, Morocco, Algeria, Tunisia, Nigeria, Angola, Kenya, Libya, and Ghana).
Said Ajen Sita, managing partner of Ernst & Young in Africa, “Foreign direct investment has a particularly important role to play as a future source of longer term capital for reinvestment in infrastructure initiatives and as an accelerator of sustainable growth across Africa. And there is far more to come. Although the African share of global FDI has grown over the past decade, we believe that it does not reflect the increasing attractiveness of a region that has one of the fastest economic growth rates and highest returns on investment in the world.”
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