October 9, 2019 / 04:57PM /
By James ANYANZWA of TheEastAfrican / Header Image Credit: waystocap.com
China is rapidly expanding its influence in Africa with increased investments in the services sector such as retail, financial, telecoms, media and technology, business and leisure.
Latest study by global consultancy firm Ernst and Young shows that the world's second largest economy has pumped a total of $72.23 billion worth of foreign direct investment into the continent between 2014 and 2018.
It is followed by France ($34.17 billion), US ($30.85 billion), United Arab Emirates ($25.27 billion) and the UK ($17.68 billion).
Other key investors on the continent are South Africa ($10.18 billion), Germany ($6.88 billion), Switzerland ($6.43 billion), India ($5.4 billion) and Spain ($4.38 billion).
The report which was released last week shows that East African countries-Kenya, Uganda, Tanzania and Rwandaâ€”have lost grounds in terms of attracting FDI.
In the period under review Kenya, Uganda, Tanzania and Rwanda ranked 5th ,12th ,13th and 17th respectively in terms of their attractiveness to FDI, compared with the year 2017 when Kenya occupied the third position, Tanzania (eighth), Uganda (11th) and Rwanda (13th).
According to the report dated September 2019, foreign investors are gradually shifting interest from the telecoms and financial sectors to a broader spread with technology playing a key role.
The report notes that in the telecoms sector, the voice business is reaching maturity and the next area of focus for operators will lie in data rollout.
"In Africa this inevitably comes at greater cost than most other regions, given the lack of suitable infrastructure in many instances, adding to the costs of importing and moving the needed equipment to the right locations," the report says.
The report also notes that FDI into Africa's financial services is declining over the longer term largely due to a combination of factors including slower economic among countries, and the fact that substantial historical investments have already been made in this space leaving less new investment potential at least for the moment, and until there is economic resurgence in these countries.
The report however notes that business services continue to see stronger levels of inward investment, as urbanising populations and rising consumer demand stimulates corporate activity.
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The US and France remain Africa's single largest investors. SOURCE | FDI INTELLIGENCE | EY ANALYSIS
The post China injects $72b in Africa as its continental influence gathers pace first appeared in TheEastAfrican on Tuesday, October 08, 2019.