INVESTMENT IN AFRICA OPPORTUNITIES AND CHALLENGES & CASE STUDY THE HONORABLE DOCTOR RAMA SITHANEN.

INVESTMENT IN AFRICA

OPPORTUNITIES AND CHALLENGES & CASE STUDY

THE HONORABLE DOCTOR RAMA SITHANEN

OUTLINE OF PRESENTATION

• Facts and Figures on FDI/PI in Africa• Opportunities going forward• Challenges to overcome• Some lessons from Mauritius• Conclusion

Facing the Challenges of Doing Business in Africa

FACTS AND FIGURES ON FDI IN AFRICA

• FDI peaked in 2008 at US$ 72 b. Down in 2009. Below 2008 in 2010

• Rising but still low share of global FDI. 4.5 % in 2010• Impact of recession and events in North Africa on FDI• Destination: unevenly distributed: few countries and

few industries • Origin: high but falling % of developed countries.

BRIC/intra African• FDI is 25 % of capital formation • Important for growth and development


FACTS AND FIGURES ON PI IN AFRICA

• PI is still small, but of growing importance• US$ 2b in 2000,US$ 8b or 23 % in 2004. Peaked in

2006 at US$ 24 billion• US$ ‑22 billion in 2008. Recovery in 2010 at US$ 22 b

and 30% of FDI• Mainly equity (78 % equity and 22 % debt) • Destination : significant % to South Africa (80%)• Stock of US$ 150 b in 2009• Source : US (42 %),Luxembourg(10%),Mauritius & UK

(5%)


OPPORTUNITIES GOING FORWARD

• Strong and sustained economic growth• Improving investment policies and business

environment • Better macroeconomic management • Structural & policy reforms and market friendly

measures• Political stability/democracy?• Strong competition from emerging markets• Improved perception of continent


OPPORTUNITIES GOING FORWARD

• Natural resource/minerals abundant• Young and growing population : labour • Rising number of households with discretionary

income • 60 % of world uncultivated arable land: key for food

security• Opportunities in many sectors beyond

resource/minerals• FDI of US$ 150 b in 2015• Highest returns on investment


CHALLENGES TO OVERCOME

• Political and social instability • Governance and state capability• Strong and predictable policies• Consolidate and strengthen reforms • Enabling business/regulatory environment• Weak national infrastructure• Scarcity of skills and human capital


CHALLENGES TO OVERCOME

• Structurally balanced development: low quality growth/no diversification • Absence of strong and vibrant private sector• No one size fits all• Low level of regional integration. Duplication • Weak regional infrastructure• Continue to improve perception• Domestic resource mobilisation


SOME LESSONS FROM MAURITIUS

• End of an economic cycle based on trade preferences• Structural reforms to sharpen competitiveness• Policy, fiscal, regulatory and institutional reforms • Complete review of taxation : direct and indirect• Open up the economy• Ease of doing business• Strong partnership with private sector



• Silent agreement• Rules based v/s discretionary procedures• Labour market reforms : flexi security• Trade reforms : simplification• Pension reforms• 100 % foreign ownership• Pragmatic and practical



Building an international financial centre of repute

• Competitive tax regime • No foreign exchange control • Flexible and modern legal and regulatory framework • Good network of DTAA and IPPA• Open to talent, skills, knowledge and capital • Investment in infrastructure : hard and soft • Stable and predictable policies + governance



• Upper middle income country with high GDP/capita• High on HDI : education, health and income• Good rank in governance, ease of doing business and

competitiveness • Dynamic, diversified and resilient economy• Tried, tested and trusted gateway for Investment into

Africa & Asia • Is model exportable?• Challenges remain. To run the next development lap


CONCLUSION

Is Africa the next Investment frontier? A contingent Yes?

• Lions on the move : McKinsey• It’s time for Africa : E & Y• Africa may be the most exciting opportunity world wide :

Barclays CEO • Are African lions really roaring ? All Africa• The global financial agencies’ desperation for an African success

story should be taken with not a grain but a calabash full of salt’. All Africa

Progress, stagnation and regression continue to coexist on the continent K. Annan


INVESTMENT IN AFRICA OPPORTUNITIES AND CHALLENGES & CASE STUDY THE HONORABLE DOCTOR RAMA SITHANEN.

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Transcript of INVESTMENT IN AFRICA OPPORTUNITIES AND CHALLENGES & CASE STUDY THE HONORABLE DOCTOR RAMA SITHANEN.