Improving the quality of life for people in Africa is a key goal of the African Development Bank and this will require the continent to attract more foreign direct investment (FDI).
Addressing delegates at the second Gauteng Infrastructure Investment Conference, in Midrand, on Friday, University of the Witwatersrand's Professor Ronald Wall said cities needed to leverage urbanisation for structural transformation, high productivity and inclusivity to prosper.
He added, however, that FDI between 2003 and 2016 had been highly uneven, with most of the investment having taken place between Europe, the US and Asia, with very little investment activity into Africa.
He added that out of all cities in Africa, Cairo, in Egypt, attracted the most FDI, followed by Johannesburg.
Wall pointed out, however, that Africa’s FDI forecast was in a decline.
“There will be a gentle rise in investment on the continent in the next few years, though. Growth hasn’t gone down, it just follows the pattern of world development, which is moving at a slow pace,” he said.
Meanwhile, Wall pointed out that South Africa and Nigeria had the largest number of home-grown firms on the continent, which in turn had a positive effect on the total growth of investment on the continent.
“Johannesburg is the only prominent zone for [international] headquarters in Africa and it can play a key role in developing Africa’s financial and business services. Gauteng is the potential New York city of Africa, playing the role as a huge investor on the African continent.”
Wall further noted that it was important to attract the right type of investment that would translate to growth generated by FDI.
Negative growth sectors, he said, included the commodities sector, where there was a strong decline in FDI.
“Africa is not commodity-intensive anymore. Many sectors, such as renewables, rank the second-highest in terms of investing in volume and growth.”
Agriculture and agroprocessing, however, had a high investment growth rate.
“The world is going through a food insecurity phase and Africa could become the world’s ‘breadbasket’ in terms of exporting food to Europe and becoming a food supplier in future,” he said.