Rise in African FDI

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Investment in the Coega Industrial Development Zone (IDZ) reflects the positive trends identified in the recently-unveiled Africa Attractiveness Index (AAI) & Foreign Direct Investment (FDI) 2017, this is according to Dr Ayanda Vilakazi, at CDC.

South Africa was ranked first in Africa for investment in infrastructure and logistics, second for economic diversification and 33 for macro-economic resilience.

FDI destination

During this period, the Coega IDZ attracted 16 of these investors against a target of 7, with a combined investment value of R11.69 billion against a target of R1,1billion.
South Africa retains its top ranking in Africa as a destination for projects, with 139 projects in 2016 compared to 130 in 2015; followed by Morocco (81) and Egypt (79).

South Africa with 28 projects originating from the US, continued to be the main target of US-based firms, followed by Morocco with 14 projects and Egypt with 13 projects. France invested in 81 projects in Africa to become the second largest investor in the continent after the US (91 projects).

China was the third with 66 projects and South Africa was sixth (29 projects). Although the share of African intra-regional investors FDI projects continues to decline, South Africa outperformed Kenya to resume the role of being Africa’s leading intra-regional investor owing to a decrease in Kenya’s outbound FDI projects in 2016.

Leading logistics

“The purpose-built Coega IDZ which is integrated into the deep water port of Ngqura is part of the country’s leading edge in logistics and infrastructure. Furthermore, one of the major strengths of the Coega IDZ is that all the necessary infrastructure and zoning is in place, which reduces the time to market by months or years,” says Ayanda.

Currently, the Coega IDZ has 40 operational investors, which have contributed a cumulative investment of R7.0 billion.

“Our new investors include a lighting plant, logistics operators, green energy companies, business process outsourcing, pharmaceutical firms and agro-processors.”

Chinese investors

Although ranked third in terms of number of projects in Africa, China’s contribution to economic growth in Africa (66 projects) represents a 106% growth from 2015 (32 projects).

A major Chinese investment in the Coega IDZ in 2016 was the R11 billion BAIC vehicle assembly plant. In addition, First Automotive Works (FAW) is assembling commercial vehicles at its R600 million facility in the IDZ. However, “we are in negotiation with a number of other Chinese investors,” says Ayanda.

The other major sources of investment in Coega are India, Germany, France and the United States.

“This is also a confirmation of the EY Africa Attractiveness Index, which puts the United States as the top FDI investor in Africa measured by the number of projects, followed by France and China.

“South Africa is ranked sixth, which makes it the leading African country investing in the continent. Companies are able to use the Coega IDZ as the gateway from which to expand into Africa due to its logistics connections to the rest of the continent,” he concludes.

Coega Development Corporation (CDC),
www.coega.co.za