In 2004, the continent attracted $12 billion of foreign direct investment, with investment flows increasing in 40 of the 53 countries in the regions. Portfolio investment now stands at about $3 billion, and is starting to move away from the well-trodden paths of South Africa and the extractive industries.
Cut flowers, textile, handicrafts and outsourcing services are some of the hot sectors benefiting from this new lease of success. "I have discovered how much hope there is [in Africa]", Paul Wolfowitz, head of the World Bank, commented last week at a conference on business in Africa.
Much of this newfound momentum is down to reforms. Many countries have taken a proactive stance to encourage private enterprise and growth from the private sector in general. Kenya, for instance, reduced the number of required business licenses from 1,347 to 195; Mali eliminated business registration fees; and Madagascar brought down the time required to register a firm from 38 days to just 8.
Similarly, the continent is trying to address regulatory and infrastructure constraints that make it hard for African firms to expand and generate jobs. In that respect, Burkina Faso passed reforms to make the labour market more flexible; Mozambique has adopted a new investment code; and Mali is improving its land titling system.
All these changes have paid off, and over time, they could help shift the image of a continent still plagued by its long-standing high-cost, high-risk label.
Source: Seeing Africa as an investment destination, World Bank
Review by Emilie Filou