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Emerging markets drive African growth


IOL Business/ Reuters - May 7th, 08:09

Johannesburg - Foreign direct investment from emerging markets into Africa outpaced that from developed markets in 2012, but the number of new FDI projects into the continent fell 12 percent from the previous year, Ernst & Young said on Monday. 

Despite this drop, which came amid a 15.2 percent decline of FDI project flow globally, Africa's share of global FDI rose in the past five years to 5.6 percent in 2012, reflecting greater investor interest, the financial consultancy said in a report.

Ernst & Young's 2013 Africa Attractiveness survey said that greenfield investments on the African continent from emerging markets such as China and United Arab Emirates increased in 2012, while those from developed markets declined.

The United States, Britain and France have been the three biggest investors in Africa over the past decade, but only the UK increased its project numbers from 2011 to 2012.

New FDI projects from the United States and France in Africa decreased by 22 percent and 39 percent respectively in the same year to year period, while projects from the UAE more than doubled, and those from China grew 28 percent.

“In the period since 2007, this category of investment from emerging markets into Africa has grown at a healthy compound rate of over 20.7 percent, in comparison to investment from developed markets, which has grown at only 8.4 percent,” the report said.

Ernst & Young said Africa's strong growth - the continent's economy has more than trebled since 2000 and is expected to grow by 4 percent in 2013 and 4.6 percent in 2014 - should be attracting higher levels of FDI.

“There is no doubt ... the African growth story is real and that the potential over the next 10-20 years is even bigger,” said Ajen Sita, Ernst and Young's Managing Partner for Africa. 

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