Sub-Saharan Africa is becoming a more attractive and hospitable destination for investors, according to a new report – Snapshot Africa – released by the Multilateral Investment Guarantee Agency (Miga), the private sector arm of the World Bank Group.
The report is an extract of a study conducted by Miga, comparing the operating costs and conditions for investors in six industries in nine sub-Saharan African countries: Ghana, Kenya, Lesotho, Madagascar, Mali, Mozambique, Senegal, Tanzania, and Uganda.
The study, designed to help investment promotion intermediaries in developing countries attract foreign direct investment (FDI), is the fifth in a series of sector analyses under Miga’s Global Enterprising Benchmarking Program. The study identifies each country’s comparative advantage by capturing a snapshot of an industry in one location at a static point in time from the perspective of an investor. In total, nearly 300 investors, both foreign and local, were surveyed for the study.
“In many regions of the world, foreign direct investment has spurred economic growth, employment, and the means of integrating into the global economy,” says Yukiko Omura, Miga’s executive vice-president, “and it is also happening in Africa”.
Snapshot Africa examined the attractiveness of six sectors from the vantage point of investors: textiles, apparel, food and beverage processing, horticulture, tourism, and call centres. These sectors currently attract the highest level of mobile FDI in Sub-Saharan Africa. (Mobile investment refers to investment that can locate at multiple locations – such as car plants, clothing factories, and so on – leading locations to compete for it.)
The study examined numerous thriving investments, underscoring the untapped potential of these sectors. Given low current investment levels, a ‘first in “advantage awaits those investors ready to move into these relatively underdeveloped markets. For prospective investors, Snapshot Africa provides hard-to-find comparable information on investor costs and conditions in the above mentioned sectors, and can help them develop their site selection options.
“Despite the many challenges for business in Africa, Miga’s Snapshot Africa indicates that there are considerable possibilities for new investments, and for diversifying and expanding business activities on the continent,” says David Bridgman, who spearheaded the report. “We hope that the findings of this study will help governments and investment promotion intermediaries explore creative ways to attract foreign partners in the sectors in which they have the greatest comparative advantage.”