http://www.engineeringnews.co.za
  SEARCH
Login
R/€ = 13.13Change: -0.40
R/$ = 11.54Change: -0.10
Au 1293.61 $/ozChange: 14.80
Pt 1267.50 $/ozChange: 19.00
 
 
Note: Search is limited to the most recent 250 articles. Set date range to access earlier articles.
Where? With... When?








Start
 
End
 
 
And must exclude these words...
Close Main Search
Close Main Login
My Profile News Alerts Newsletters Logout Close Main Profile
 
Agriculture   Automotive   Chemicals   Competition Policy   Construction   Defence   Economy   Electricity   Energy   Environment   ICT   Metals   Mining   Science and Technology   Services   Trade   Transport & Logistics   Water  
What's On Press Office Tenders Suppliers Directory Research Jobs Announcements Letters Contact Us
 
 
 
RSS Feed
Article   Comments   Other News   Research   Magazine  
 
 
Feb 17, 2012

Foreign investment key to sustaining African growth

Back
Ernst & Young Africa CEO Ajen Sita discusses the impact infrastructure and foreign direct investment can have on the economy. Camerawork: Nicholas Boyd. Editing: Darlene Creamer.
Africa|Coca-Cola|Education|Ernst & Young Africa|Resources|Unilever|Africa|Europe|China|India|South Africa|Human Resources And Infrastructure|Media Brief-ing|Product|Products|Services|Ajen Sita|Infrastructure|Michael Lalor
Africa|Education|Resources||Africa|||Products|Services|Infrastructure|
africa-company|cocacola|education-company|ernst-young-africa|resources|unilever|africa|europe|china|india|south-africa|human-resources-and-infrastructure|media-brief-ing|product|products|services|ajen-sita|infrastructure|michael-lalor
© Reuse this



Africa must ensure that it improves its attractiveness to foreign direct invest- ment (FDI), including from other large emerging countries, if it is to sustain its growth and development, says Ernst & Young Africa CEO Ajen Sita.

However, to become more attractive, the continent must develop its human resources and infrastructure, he said at the media brief-ing of Ernst & Young and Oxford University School of Economics’ ‘Rapid Growth Market Forecast’ for January 2012.

“Governments compete for success and capital goes where the market is safe, oppor- tunities exist, skills exist and where infrastruc- ture exists. Just being part of a [rapid growth market] group does not automatically attract capital, so African countries need to grow their competitiveness,” he said, highlighting that Africa received only 4.5% of global FDI.

Infrastructure is important because trade flows where there is infrastructure. The main anchor weighing down some of the largest economies in Africa is ageing infrastructure in dire need of renewal, he explained.

Investing in infrastructure also helps to build a country’s middle class, which makes the country attractive to consumer companies, such as Unilever and Coca-Cola, both of which are already present in Africa, having identified the potential of the African middle class, emphasised Sita.

However, how could Africa compete against other emerging and rapid-growth markets? Many of these have large populations with a good education and high skills levels, enabling them to develop and sustain good manufac-turing capabilities at a low cost.

“Africa has natural resources, but how can we develop this as a strategic competitive advantage? We can use it to fuel rapid growth and mature markets and, thus, boost growth in Africa.

“However, if we develop infrastructure to provide increased connectivity and develop regional free trade zones to enable Africa to be a market for its own products and services, then this will benefit the development of a middle class and encourage the development of skilled labour,” averred Sita.

The continent’s population, approaching one-billion people, provided a market for products and services, but Africa should think beyond that as forming a supply of talent, which was why investment into education and skills development was critical, he explained.

“Education and skills development is something we know has been done well in some large countries, such as India, where it forms a key differentiator for investors looking for a large pool of skilled people. We believe more investment in human capital and development should be done across the continent because talent functions as a strategic resource, which will be a significant differentiator in the world economy,” said Sita.

Further, the need for infrastructure provided investment opportunities for some of the world’s largest companies to enter the conti-nent and participate in its growth.

Africa had demonstrated over a decade of strong fiscal discipline and good macro-economic policy and management. The continent had relative political stability in most regions and a number of years of successful and growing levels of democracy, said Sita.

Government debt is manageable and countries maintained some manoeuvrability in terms of infrastructure expenditure and reallocation of funds to different priorities within existing budgets.

India and China have each received more FDI than the whole of Africa, despite improve-ments and a decade of solid gross domestic product growth, he noted.

“We should be attracting more FDI. We believe it is because we are not doing enough to promote Africa and compete for capital – which means we must reposition Africa in the minds of investors,” he stated.

However, the challenge was what to do with improved growth and new wealth, he reiterated, highlighting that reinvesting in a domestic economy’s industries could help to sustain long-term growth rates.

“Resource-based economies have benefited from high global resource prices, but the question of sustainability now arises, especially in light of the debt crisis in Europe.”

Larger economies had large consumer markets that could provide a buffer against crises, such as the current eurozone crisis, something South Africa lacks. High consumer debt prevented South Africa’s market from thriving, and the management of the debt levels of consumers could promote a strong domestic economy, Sita said.

“We also focused on sustainability during our research into rapid growth markets and the sustainability of high growth rates. Many countries in Africa have had high single-digit growth for a decade or longer, which reflects a much deeper growth story,” concluded Ernst & Young Africa Business Centre director Michael Lalor.

Edited by: Martin Zhuwakinyu
© Reuse this Comment Guidelines (150 word limit)
 
 
 
 
 
 
 
 
Other Trade News
Article contains comments
The Department of Trade and Industry (DTI) has rejected claims by black economic-empowerment (BEE) advisory firm EconoBEE that there is likely to be a delay to the scheduled May 1 implementation of the revised BEE Codes of Good Practise. “We are on track for the May...
Article contains comments
President Jacob Zuma and Netherlands Prime Minister Mark Rutte have identified agriculture, ports and water and sanitation as some of the key areas to enhance cooperation between their two countries. President Zuma held a bilateral meeting with Prime Minister Rutte...
A new process of consultations aimed at accelerating agreements over a work programme to complete the Doha Development Agenda (DDA) has kicked off, the World Trade Organisation (WTO) said this week. During the first 2015 open-ended meeting with all members on...
More
 
 
Latest News
Updated 1 hour 48 minutes ago Western Cape entrepreneurs had just four days before applications closed to secure cash injections of at least R10-million by pitching their business ideas to major funding bodies at the Western Cape Funding Fair – the province’s own “Dragon’s Den”. The deadline for...
INSTALLATION The system could also pinpoint an aircraft to within two nautical miles
Updated 2 hours 20 minutes ago National carrier South African Airways (SAA) is deploying a locally developed satellite payment system, which is also able to track the aircraft anywhere in the world, across its fleet of airliners. The system, developed by satellite authentication company SatAuth,...
Updated 2 hours 29 minutes ago Financial services provider Stanlib aims to channel the bulk of a R1.2-billion infrastructure equity fund into some of the infrastructure projects under way in South Africa, with a particular focus on renewable energy. Stanlib on Tuesday said the fund, which would...
More
 
 
Recent Research Reports
Liquid Fuels 2014 - A review of South Africa's Liquid Fuels sector (PDF Report)
Creamer Media’s Liquid Fuels 2014 Report examines these issues, focusing on the business environment, oil and gas exploration, the country’s feedstock supplies, the development of South Africa’s biofuels industry, fuel pricing, competition in the sector, the...
Water 2014: A review of South Africa's water sector (PDF Report)
Creamer Media’s Water 2014 report considers the aforementioned issues, not only in the South African context, but also in the African and global context, and examines the issues of water and sanitation, water quality and the demand for water, among others.
Defence 2014: A review of South Africa's defence industry (PDF Report)
Creamer Media’s Defence 2014 report examines South Africa’s defence industry, with particular focus on the key participants in the sector, the innovations that have come out of the sector, local and export demand, South Africa’s controversial multibillion-rand...
Road and Rail 2014: A review of South Africa's road and rail infrastructure (PDF report)
Creamer Media’s Road and Rail 2014 report examines South Africa’s road and rail transport system, with particular focus on the size and state of the country’s road and rail network, the funding and maintenance of these respective networks, and the push to move road...
Real Economy Year Book 2014 (PDF Report)
This edition drills down into the performance and outlook for a variety of sectors, including automotive, construction, electricity, transport, steel, water, coal, gold, iron-ore and platinum.
Real Economy Insight: Automotive 2014 (PDF Report)
This four-page brief covers key developments in the automotive industry over the past 12 months, including an overview of South Africa’s automotive market, trade figures, production and the policies influencing the sector.
 
 
 
 
 
This Week's Magazine
BRUCE BRADFORD The 3D printers have a clear upgrade path to eventually print in wood, ceramics and metal-alloys
Three-dimensional (3D) printers being sold in South Africa by electronics distributor Rectron currently print in two types of plastic, but have a clear upgrade path over the next five years to eventually print in wood, ceramics and metal-alloy materials, says Rectron...
The world’s two dominant commercial aircraft manufacturers, Airbus of Europe and Boeing of the US, both recently announced that they had made record aircraft deliveries in 2014. Boeing set a global record for the industry with 723 commercial aircraft delivered, while...
The Western Cape is shifting further into the renewable-energy space with the official opening of a factory specialising in solar inverters, a key component of solar photovoltaic (PV) plants. The investment in the manufacturing facility in Cape Town aims to boost the...
Business Leadership South Africa (BLSA) last month welcomed Cabinet’s establishment of a technical team war room to undertake various interventions to improve electricity supply security over the short- and medium-term, but added that the private sector also had a...
Despite a rapid rise in mobile connections and the economic and social benefits of such connectivity, more than half of the world ended 2014 unconnected. For this reason, industry commentators believe the biggest impact of mobile technology is still to come –...
 
 
 
 
 
 
 
 
 
Alert Close
Embed Code Close
content
Research Reports Close
Research Reports are a product of the
Research Channel Africa. Reports can be bought individually or you can gain full access to all reports as part of a Research Channel Africa subscription.
Find Out More Buy Report
 
 
Close
Engineering News
Completely Re-Engineered
Experience it now. Click here
*website to launch in a few weeks