REUTERS
Investors from Europe, Asia and the United States are not the only ones chasing growth opportunities in Africa these days. Africans themselves are waking up to the potential in their own back yard.
The same trends that have lured foreign capital to the continent — rising wealth, sustained economic growth and a swelling young population — are attracting investors in countries such as South Africa, Kenya, Nigeria and Namibia.
Between 2003 and 2011, intra-African investment into new foreign direct investment (FDI) projects in Africa grew at a 23 percent rate. Since 2007, that rate has increased to 32.5 percent, more than double the growth in investment from non-African emerging markets and almost four times faster than FDI from developed markets.
As Nigerian Finance Minister Ngozi Okonjo-Iweala told the 2013 World Economic Forum on Africa: “We focus on FDI all the time. How about AIA — Africans investing in Africa?”
Cross-border African investment is set to accelerate as local companies seek new markets, resource-rich countries launch sovereign wealth funds, and assets held by pension funds grow. South Africa, Africa’s biggest economy, has led the way in intra-African investment, with companies such as MTN and Shoprite among the first to venture farther north. South Africa is now one of the top five overall investors on the continent. To the east and west, regional powerhouses Kenya and Nigeria also are major cross-border investors.
Nigeria’s Dangote Cement, controlled by Aliko Dangote (pictured), the continent’s richest man, is investing $5 billion to build an African cement empire, with projects planned in Cameroon, Senegal, Ethiopia, Zambia and South Africa.
Kenyan and Nigerian banks also have expanded into their surrounding regions. Nigeria’s United Bank for Africa, with operations in 18 other African states, including Ghana, Mozambique and Tanzania, expects to generate half its revenue from the rest of Africa in coming years, up from 20 percent now.
“There is a lot of potential in sectors like oil and gas, which in the next 10 years will still be booming in Africa,” said Emmanuel Nnorom, chief executive of UBA Africa.