Collaboration between African IPAs to boost FDI by 150% in 10 years – Yofi Grant
Yofi Grant, CEO of the Ghana Investment Promotion Centre (GIPC), has said a the creation of an African Investment Promotional Association, has the potential impact of increasing intra-African foreign direct investment by 150% in the next decade.
According to him, the creation of an African Investment Promotional Association, will help African Investment Promotion Agencies to collectively optimise trade and investment opportunities on the African continent.
Speaking as host of the first Annual Assembly of African Investment Promotion Agencies (IPAs) on Wednesday, January 25, 2023, Mr Grant averred, African IPAs are the engines of growth of African economies further asserting that, African IPAs need to come together to facilitate and monitize the continent’s resources for growth.
In his view, it will take the collaboration of African IPAs to propel intra-Africa trade and investment for the attainment of the 150% rise in intra-Africa FDI in the next decade.
Foreign Direct Investment (FDI) in Africa reached a record high of $83 billion in 2021, according to recent data.
This marks a significant increase from $39 billion in 2020, and accounts for 5.2% of global FDI.
Southern Africa, East Africa, and West Africa all saw an increase in FDI flows, while Central Africa remained flat and North Africa saw a decline.
In 2017, the stock of intra-Africa FDI reached a high of $52 billion or 11% of Africa’s total FDI stock. Southern Africa, particularly South Africa, is the main source of intra-Africa FDI, comprising 60-70% of the intra-Africa FDI stock in most years. West Africa has also emerged as an important source of intra-Africa FDI.
The call for the collaboration of African IPAs has been supported by the Secretariat of the African Continental Free Trade Area (AfCFTA) with the Secretariat envisioning the critical role African IPAs will play in the facilitation of some $130bn investment in the four priority areas under the trade pact.
The four sectors identified as having high potential for investment are the automobile, agriculture and agro-processing, pharmaceuticals and transport and logistic sectors.
The selection of the four sectors, the report further asserts, is on the basis of their potential to meet the Continent’s demand through local production as well as their potential value as exports to the rest of the world.
Per the report, automotive industry in Africa is expected to grow to more than $42 billion by 2027 due to increasing domestic demand, rising incomes and high projections for intra-African trade.
The agriculture sector also offers opportunities for economic growth, job creation, poverty reduction and food
security, with the potential for even more value added with agro-processing. Intra-African trade in agriculture is expected to increase by 574% by 2030 if tariffs are eliminated under the AfCFTA.
“The pharmaceuticals was selected as a vital value chain given its potential for more value added as a complex product, given the feasibility of overcoming traditional barriers under the AfCFTA. The AfCFTA will help increase intra-African trade in pharmaceuticals, which is currently extremely low (only 3% of demand is met by intra-African trade), leading to more resilient health supply chains.
“Transport and logistics will be a crucial area for investment as an enabler of trade in goods as intra-African trade increases. The AfCFTA is projected to increase intra-African trade demand by 28%, with demand for almost 2 million trucks, 100,000 rail wagons, 250 aircraft and more than 100 vessels by 2030,” the report stated.
