Ghana, has placed fourth in the 2016 Ernst & Young (EY) Africa Attractiveness Index (AAI), a report released in Johannesburg – South Africa on Wednesday.
The latest EY’s Africa Attractiveness index, shows Ghana, has improved by two places. The 2015 report released last year, saw the country placing sixth.
“Despite having a 31.7% decline in FDI projects in 2016, and weak growth in recent years, West Africa’s second largest economy, Ghana, remains a key FDI market”, it said.
“The country’s improving macro-economic environment and strong governance track record has seen Ghana rise to fourth position in the EY Africa Attractiveness Index (AAI). The index was introduced in 2016, to measure the relative investment attractiveness of 46 African economies based on a balanced set of shorter and longer-term metrics”.
Featuring in the top 10 of the AAI, is Ghana’s neighbour to the West, Cote d’Ivoire, with a 21.4 percent jump in FDI projects in 2016, illustrating that it’s becoming a country more favoured by investors.
Also in the West Africa sub-region is Senegal, which emerged as a potential major FDI destination, although this is not reflected in its current FDI numbers.
It does, however, rank strongly on the AAI 2017, taking eighth position, due to its diverse economy, strong strides in macro-economic resilience and progress in improving its business environment.
South Africa, remains the largest FDI hub in Africa, when measured by project numbers, increasing 6.9percent, while Morocco, regained its place as the continent’s second largest recipient with projects up by 9.5 percent, followed by Egypt, which attracted 19.7 percent more FDI projects than the previous year.
The index was introduced in 2016, to measure the relative investment attractiveness of 46 African economies based on a balanced set of shorter and longer-term metrics.
Egypt, Kenya, Morocco, Nigeria and South Africa, collectively attracted 58 per cent of the continent’s total FDI projects in 2016.
The report provides an analysis of Foreign Direct Index (FDI) investment into Africa over the past ten years.
Last year’s data, shows Africa attracted 676 FDI projects, a 12.3 percent decline from the previous year, and FDI job creation numbers declined 13.1 percent. However, capital investment rose 31.9 percent.
The surge in capital investment was primarily driven by capital intensive projects in two sectors, namely real estate, hospitality and construction (RHC), and transport and logistics.
The continent’s share of global FDI capital flows increased to 11.4 percent from 9.4 percent in 2015. This made Africa the second-fastest growing FDI destination by capital.
Africa Chief Executive Officer (CEO) at EY, Ajen Sita, was quoted as saying “This somewhat mixed picture is not surprising to us. Investor sentiment toward Africa is likely to remain somewhat softer over the next few years.
This has far less to do with Africa’s fundamentals than it does with a world characterized by heightened geopolitical uncertainty and greater risk aversion.
Investors with an existing presence in Africa remain positive about the continent’s longer-term investment attractiveness, but they are also cautious and discerning.”
Sita, a global leader in assurance, tax, transaction and advisory services concluded that, “By 2030, Africa remains on track to be a US$3t economy. However growth needs to become more inclusive and sustainable to eradicate poverty at the levels that are required.
If we accept the reality that physical connectivity – enabled by regional integration and the development of physical infrastructure – will remain a key stumbling block to inclusive growth across Africa for at least the next decade, then the need to actively embrace digital connectivity becomes critical.
However, efforts to harness the potential of digital technologies as a fundamental driver of inclusive growth are still far too piecemeal and fragmented.
What is required is a far more collaborative effort between governments, business and non-profit organizations to adopt technological disruption, and create digitally enabled offerings with a particular focus on health, education and entrepreneurship.”