An updated report by audit, tax and advisory firm KPMG has found that foreign direct investment (FDI) into Africa would continue to increase and what was seen currently was only the “tip of the proverbial iceberg”.
Africa would continue to be one of the largest FDI destinations and hold the fastest-growing economies, said KPMG chairperson Yunus Suleman, adding that the continent had much more to offer.
The report, titled ‘African Emergence: Rise of the Phoenix’, was released ahead of the twenty-third World Economic Forum (WEF) on Africa in Cape Town next week.
The forum, themed ‘Delivering on Africa’s Promise’, will be held from May 8 to 10, at the Cape Town International Convention Centre, where South Africa aimed to showcase itself as an attractive investment destination.
Several KMPG management and partners were expected to participate in this year’s event to raise awareness about investing in Africa, promote creative partnerships and build relationships.
Increasingly, Africa was receiving a lot of attention as investors sought a platform to pull themselves out of the financial crisis, with the continent offering multiple opportunities, and the WEF showcasing them, Suleman said at a pre-event press briefing at KPMG’s Johannesburg offices.
Africa “rode the wave” of the global financial crisis better than most other economies and the continent was likely to help the now-struggling developed countries emerge from the remnants of the meltdown through investment opportunities.
“Africa is described as investor hungry. In fact, it currently has an insatiable appetite for growth. And this growth is good for investors ‒ there is undoubtedly money to be made in Africa,” he said.
The historically limited understanding of investing in Africa was fading, and with growing interest and awareness of the continent, Africa could benefit from the relationships formed at the WEF on Africa.
The continent was increasingly becoming politically stable, with continuing improvements in human rights records, social development, education and health enabling a growing, healthy and stable marketplace.
Opportunities were abundant, the company said, citing undiscovered oil in excess of 100-billion barrels; an untapped consumer market of over one-billion people; enormous agricultural potential; and continuing growth within the oil, gas, mineral and metals sectors.
However, Africa was “very diverse”, KPMG global Africa practice COO Anthony Thunstrom added, pointing out that the continent differed from countries such as China, India and Brazil.
“Africa is not a country,” he noted.
The continent held over 50 very different countries, each with varied cultures, governments, laws, opportunities, restrictions, policies and regulations, besides others, to navigate.
A prerequisite to successful investment was thorough market research, an understanding of wealth distribution and location, disposable income levels and government policies regarding new ventures and merger and acquisition activity on the continent.
KPMG, through its Doing Business in Africa series, aimed to assist investors to better understand each region they wanted to invest in.