Financial services advisory firm EY’s third instalment of its ‘Africa Attractiveness Program 2016’ report expects continued variable economic performance across Africa’s subregions.

This follows on the sharp downward revisions in overall growth forecasts this year, mainly reflecting challenging conditions in sub-Saharan Africa’s three largest economies – Angola, Nigeria and South Africa.

However, according to the programme, outside of these three economies, a number of bright spots remain, particularly in the east, Francophone countries and in North Africa, where growth rates of 4% and higher are still being achieved.

The upshot of such ‘multispeed’ growth and more discerning investors is a greater degree of unpredictability in foreign direct investment (FDI) flows. There will likely be shifts in FDI towards the countries that are continuing to grow robustly.

It remains likely, however, that there will be a relative slowdown in investment in sub-Saharan Africa investment over the next 18 months, as investors adjust their investment strategies.

This is apparent, to some extent, in the relatively slower FDI activity in the first half of 2016.

Further, in the first half of 2016, greenfield FDI projects in Africa were down 13.4%, compared with 2015.

However, the capital value of total investments across the continent rose 30%, with the average capital investment per project increasing from $97-million to $145-milliom in the first half of 2016.

Similarly, job creation in Africa resulting from FDI projects was also up, rising 12.6%.

“Investor sentiment towards Africa as an attractive investment destination is likely to remain somewhat softer over the next few years. This has far less to do with Africa’s fundamentals than it does with a world characterised by heightened geopolitical uncertainty and greater risk aversion,” says EY Africa Business Centre leader Michael Lalor.

Within North Africa, Egypt remains the largest investment destination, posting a 32.4% increase in FDI projects over the first half of 2015.

Egypt’s FDI accounts for a 43% share of that subregion’s capital investment.

Recent initiatives to allow the currency to float freely will likely trigger greater investment. In addition, policy change promises to attract new investments, as the practical realities of foreign exchange shortages disappear, enabling a more business-friendly environment.

“There has been a surge in investment from Asia-Pacific, with the region becoming the second-largest investor when measured by FDI projects, capital and job creation.”

China-sourced FDI into Africa saw a dramatic increase in the first half of the year, with China-sourced FDI projects up 209%, making China the third-biggest investor in the continent.

Overall, however, Western Europe remains the largest regional investor in Africa, contributing 35.1% of FDI projects and 17.8% of capital investment in the first half of 2016.

The second half of 2016 remains difficult for Africa, although there are signs that the worst of the economic downturn is over.

The commodities cycle remains weak, and both the UK’s Brexit decision and the election of Donald Trump in the US have further contributed to uncertainty in investor sentiment.

“This could further impact on FDI into Africa, particularly given the strong role both the US and the UK already play as major investors in Africa. Investors will likely adopt a more cautious approach as they wait for the implications of these events to take hold, and understand what this means for them,” Lalor says.