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Foreign investment into Africa surges in 2014

Although foreign direct investment took a hit worldwide in the past year, Africa continued to generate strong interest, with a 136 percent increase in capital invested over the previous year, Ernst & Young’s latest Africa Attractiveness Survey shows. This investment created 188,400 new jobs in Africa, it said.

This growth in FDI dollars invested came despite an overall decline in the number of FDI projects in Africa and some uncertainty about the region’s attractiveness to investors. While last year’s Ernst & Young survey showed Africa rising to become the second most attractive investment destination in the world, it ranked fourth this year, behind the Pacific Oceania region, North America and Asia.

Nonetheless, the data behind that ranking revealed what the study’s authors described as a “wide perception gap” between established investors in Africa and potential investors. “Investors who already have operations in Africa believe it is the most attractive investment destination in the world,” the study found.

Perception Gap in Africa

The decline in the number of FDI projects in Africa was actually smaller than many other regions of the world, where FDI projects fell by 15 percent or more, reflecting a slowing global economy, regional conflicts and geopolitical uncertainty.

Foreign direct investment in Africa totaled $128 billion in 2014, the survey said, and this investment created 188,400 new African jobs, a 68 percent increase from 2013. Additionally, the average investment amount per project has increased to USD $174.5 million, from $67.8 million in the previous year.

The study said that two of the main drivers of investment in Africa were a growing middle class, and increased urbanization, which are supporting investment in real estate, hospitality, construction, telecommunications, media, technology, financial services and consumer products.

In 2014, Sub-Saharan Africa accounted for over a quarter of OPIC’s total commitments, with $768 million in investments.

The full report from Ernst & Young is available here.

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