The UK has become the largest foreign direct investor in Africa, taking over from the US in 2013.

According to the results of Ernst & Young’s (EY’s) 2014 Africa Attractiveness Survey, Africa is now the most attractive region in the world for UK investment. UK companies invested a total of US$4.6bn in Africa-based projects in 2013, overtaking total US investment worth US$2.6bn. 54% of UK respondents expressed a perceived improvement in Africa’s attractiveness as a place to do business.

South Africa remains the most popular African destination for UK businesses but the country’s importance has declined, with the overall share of inward investment falling to 25% from 35%.

The survey finds that UK companies are increasingly attracted by new investment centres in East and West Africa as a result of rising political risks in North Africa in the last few years. Kenya, Ghana and Mozambique replaced Algeria, Libya and Tunisia in the 10 ten destinations for UK foreign direct investment (FDI) between 2009 and 2013.

Egypt has seen UK FDI drop significantly. The country was the second most popular destination for UK investors before 2009 and has since dropped to sixth place.

The results of the survey demonstrate a shift away from investing in the extractive industries and towards consumer-related sectors.

The African mining and metals sector did not feature in the top five sectors for UK FDI from 2009 to 2013, having been the second largest sector from 2004 to 2008. Coal, oil and natural gas extraction also fell from third to fifth place.

Instead, the top three sectors for UK FDI were business service (20%), financial services (15%), and technology, media and telecoms (15%). The proportion of business service-related projects in Africa doubled from 2004 to 2008 to 2009 to 2013.

Commenting on the survey’s findings, the UK’s trade envoy for South Africa, Baroness Scotland, says: “There is no longer an over reliance upon extraction. A consumer revolution is being fuelled by the African middle class. The investment by African governments in infrastructure, especially in the digital space, is allowing companies to flourish in the areas of technology and communications.”

Michael Lalor, lead partner of EY’s Africa business centre, also sees a bourgeoning middle class in Africa as being important for the attractiveness of the continent as an FDI destination. “UK investors are leading the way in recognising Africa’s growth potential,” he says.

“Africa’s stronger investment attractiveness is best explained by its sustained growth rates in the context of slower global growth. Africa’s growth prospects are likely to remain solid, especially for British companies, as an urbanising and rising middle class drives demand for consumer products and improved services.”