Lean times ahead for FDI in Africa

African countries should brace
for a significant decrease in
foreign investment from the
UK in the wake of Brexit,
Neville Mandimika, Africa
analyst in the global markets
division of Rand Merchant
Bank told members of the
Exporters’ Club Western Cape
recently.
“The UK to date is still the
biggest source of foreign direct
investment in Africa,” he said.
“This is expected to change and
the UK figures are going to be
shaky going forward. There is
major uncertainty as to what
Brexit will mean for investment
into Africa. They have some
big issues of their own to deal
with in the next few years – and
leaving the European Union is
going to come with a bill for the
UK as well.”
In the US, he said, there
were also indications of less
foreign direct investment going
into Africa.
“African governments
are going to have a huge
responsibility because when
big brother is no longer giving
the money it is up to you to
find it.”
He said dealing with
corruption and other major
challenges was going to
become increasingly important
as governments would have to
find alternative resources to
invest in infrastructure and
grow economies.
He said Egypt, Morocco,
Ghana, Botswana, Mauritius,
Kenya and Tanzania were
showing an understanding of
the current global economic
environment. “Algeria,
Ethiopia, Cote d’Ivoire and
Zambia are also showing major
improvements.”
He said countries like South
Africa and Nigeria, however,
were becoming very difficult
environments in which to
operate.
He said several African
countries had already
embarked on initiatives to
diversify their economies and
to grow manufacturing bases.
“Kenya, for example, is being
dubbed the Silicon Valley of
Africa as it has really embraced
technology,” he said.