Rapid population growth, urbanisation expected to drive next phase of continent’s growth
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Foreign Direct investment (FDI) inflows to West African countries increased 12 per cent to $11.4 billion in 2016, supported by recovering investment in Nigeria, recent analysis conducted by the Dubai Chamber of Commerce and Industry has revealed.
The analysis, based on data from United Nations Conference on Trade and Development (UNCTAD), was released last weekend by the Chamber as it prepares to host the 4th Global Business Forum on Africa in Dubai on November 1st-2nd, 2017.
According to the data, FDI inflows into Sub-Saharan Africa amounted to $45.9 billion in 2016, marking an eight per cent decline from the previous year. The drop was largely attributed to the impact of lower commodity prices on producing countries in the region.
The main recipients of FDI inflows in 2016 were the diversified producers of East Africa region, led by Ethiopia, which saw inflows surge 46 per cent to $3.2 billion during the year. Infrastructure and manufacturing were identified as key sectors attracting the highest levels of FDI in the country, while Mauritius and Madagascar also saw steady inflows.
Ghana was the third largest FDI recipient in Sub-Saharan Africa in 2016, recording inflows of $3.5 billion and nine per cent annual growth. The increase was supported by steady inflows to the country’s oil and gas sector, as well as regional FDI in the area of cocoa processing.
Although progress and development varied across the region, the majority of African countries achieved income growth, a reduction in poverty, and improvements in infrastructure, health, and education. Such gains are expected to mitigate the impact of external shocks, which are the main risk to Africa’s exposed economies.
Despite the overall decline in real GDP growth for the Sub-Saharan Africa region in 2016, a number of countries in the region saw strong economic growth during the year such as Ethiopia, which grew by eight per cent, while Senegal saw growth of 6.6 per cent. Kenya and Rwanda recorded a growth rate of six per cent.
Trade figures for 2016 revealed that a majority of merchandise exports from Sub-Saharan Africa were primary products, which accounted for around 78.7 per cent of total exports. Exports of manufactured products accounted for 21.4 per cent of all exports during the same year. The main primary exports included fuel, raw materials, pearls, precious stones, and agricultural products four per cent.
Several economic trends are expected to drive Africa’s next phase of economic growth, including rapid population growth and urbanisation, and accelerating technological change. These trends are seen to stimulate sustained growth in consumer markets and business supply chains.
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