SOUTH Africa remained the destination for the most foreign direct investment (FDI) projects in 2020 in spite of the sharp fall in FDI in the continent due to the impact of the Covid-19.
The EY Africa Attractiveness Report released yesterday showed that South Africa received the most projects in the continent in 2020, followed by Morocco and Nigeria.
On a country basis, South Africa had the highest FDI score of 31.1 points, followed by Morocco at 17.7 points and Nigeria at 17.5 points.
Though South Africa attracted more projects, Nigeria received the highest capital investment, with FDI valued at $6.6 billion (R103.7 bn) in 2020.
The EY report showed that FDI in South Africa remained buoyant owing to the country's diversified economy, which is more reliant on services type sectors.
In terms of jobs created, Morocco lead with approximately 12 000 jobs created, followed by South Africa with 9 000 new jobs.
“South Africa is less reliant on resource-based industries, and more driven by services and technology sectors, helping it attract more projects during the pandemic,” read the report.
“South Africa received two large investments, including the acquisition of Pioneer Foods by US-based PepsiCo and Google's investment in an undersea fibre optic cable to boost internet speed in the country.”
However, the report also showed that FDI into Africa plummeted by 50 percent last year as demand for export commodities plunged.
EY partner Sandile Hlophe said Africa's FDI halved in 2020, making it the hardest-hit region globally.
Hlophe said FDI in Africa trailed all other emerging markets, as well as the key mature regions, with Europe only decreasing by 23 percent, North America by 19 percent.
Only Asia-Pacific's decline was close at 43 percent.
“This could be ascribed to Africa's still largely resource-export dependent economies, which felt the impact of commodity price declines and rapidly decreasing demand, particularly from China, causing them to fall into recession,” Hlophe said.
China was the largest investor in Africa during the five-year period by jobs and capital, but only third in terms of the number of projects.
France was the largest investor into Africa in 2020, followed by the US, the UK and China based on FDI project numbers.
The African Development Bank estimates that Africa needs additional financing of $154bn in 2020-21 to properly recover from the crisis.
“The road to recovery will be difficult, but a few key catalysts can be harnessed to accelerate growth,“ Hlophe said.
“We believe that private sector involvement, slowly recovering trade, rising commodity and crude prices, rebounding tourism and strong agricultural output will determine Africa's recovery prospects.”
BUSINESS REPORT ONLINE