Wednesday, June 03, 2015

Sharing Africa or owning shares in Africa?

Despite the Ebola epidemic in West Africa and ongoing terrorism business consistently express strong interest in African assets. Foreign investments hit a record $80 billion in 2014, with emerging market countries continuing to show a strong interest in African assets.

Investors from the U.S., the United Kingdom and France hold the biggest share of African investments: $178 billion in 2012, the latest data available. Chinese investors held nearly $28 billion in assets, a trend likely to continue as Chinese labor gets more expensive for manufacturers; investors from Brazil, Russia, India and South Africa also hold large portions of the foreign-investment total.

The majority of investments flow into six African nations that represent a third of the continent's population. The two largest destinations for investors are South Africa and Nigeria, which have the two largest economies.

Just as countries such as China were the low-cost producers for many large international conglomerates in the 1980s, more once-emerging nations are exploring setting up shop in Africa. The stubborn global recession prompts many manufacturers to look for even lower cost producers; Ethiopia, Kenya, Rwanda and Tanzania are all trying to attract these jobs. These countries must of course deal with the same issues that other emerging-market nations dealt with 30 years ago: training the workforce, establishing reliable energy supplies and upgrading necessary infrastructure to transport manufactured goods.

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