As West Africa emerges as a potential competitive economic bloc, policymakers, regional governments and investors are grappling with methods to "derisk investment" in new business models.

The “surge” of regional players and multinationals into the region’s finance, retail, fast-moving consumer goods, oil, energy and mining sectors, has been opening up “key economic opportunities” for Africa’s fastest growing region, Standard Bank said in a statement on Wednesday.

However, while Africa’s aggregate foreign direct investment (FDI) flows increased 5% to $50-billion in 2012 – an improved growth performance that could be attributed to improvements in infrastructure in half of Africa – FDI flows into West Africa contracted 5% to $16.8-billion.

Standard Bank head of power and infrastructure David Humphrey said the quality and sufficiency of the region’s infrastructure was one of the “major impediments” to developing growth and improving competitiveness in West Africa.

“Of [the] investments channelled to the two major oil-producing countries of the region, FDI to Ghana remained stable at $3.3-billion, but inflows to Nigeria declined by 21% to $7-billion and accounted for much of the diminished flows to the region,” he pointed out.

To counteract the decline, Nigeria privatised its State-owned distribution and generating companies in October 2013 and planned to announce a five-year regulatory review aimed at balancing the need for investment to drive better efficiency and reliability of service and the price charged by the private sector.

“If the price is investment conducive and correct incentives are put in place, rapid improvement should be expected over the next two to three years,” Humphrey noted.

Currently, technological, regulatory, financial and geopolitical factors that “change the game” and replicate energy access success stories were being examined by all stakeholders across West Africa, but viable funding mechanisms and an enabling environment were needed to “power the future of a continent that holds 15% of the world’s population”, Standard Bank said.

Meanwhile, FDI in consumer-orientated manufacturing and services was starting to rise, reflecting the growing purchasing power of Africa’s emerging middle class, the financial services group added.

“Between 2008 and 2012, the share of consumer-related industries in the value of greenfield investment projects in Africa grew from 7% to 23%.”

Humphrey believed this boded well for regional integration around infrastructure investments, with “unprecedented collaboration” seen around infrastructure in West Africa.

He cited some of the top ten infrastructure projects currently under way or under negotiation in Africa, including the $8-billion Abidjan-Lagos motorway set to start construction in 2015, which planned to connect five West African countries, namely Côte d'Ivoire, Ghana, Togo, Benin and Nigeria along a predominantly coastal route.

Ghana was also planning a range of large-scale infrastructure projects aimed at boosting the economy's growth potential.

“These projects address the large infrastructure gaps present in the economy, a focus point of the Ghana Shared Growth and Development Agenda,” Humphrey explained.