Africa Foreign Investor Survey 2005 - unido

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majority of firms global exporters (more than 50 per cent). Two of the countries, Côte d’Ivoire and Kenya, might be considered to be entrepôt economies, supplying neighbouring land-locked countries with consumer goods (as a result of historical structures). This is also reflected, as shown earlier in table 3.2, by the fact that the dominating subsectors in these two countries are marketing, sales and distribution, which, in the case of Kenya, accounts for almost one third of the country sample. About 30 per cent of the companies in Côte d’Ivoire and Kenya are regional exporters. Senegal occupies a similar position – nearly 30 per cent of firms in the country sample were exporting to regional markets. However unlike Côte d’Ivoire and Kenya, Senegal has few globally-oriented exporters. It is also striking that all three countries were themselves significant sources of foreign firms operating in neighbouring countries – Kenya with 38, Côte d’Ivoire with 18 and Senegal with 11 firms in the survey sample (annex table 3.2). Indeed, firms of Kenyan origin were the most numerous of foreign firms located in the United Republic of Tanzania and second most numerous in the Uganda sample, while Côte d’Ivoire firms were third in Figure 3.15 Distribution of market orientation Figure 3.17 Distribution of share structure Global 14.2% (167 cases) Joint Venture, through partial acquisition 13% (142 cases) Regional (SSA) 14.6% (171 cases) Local 71.2% Joint Venture, greenfield 26.4% (289 cases) Wholly-owned, greenfiel d 48.8% (535 cases) (835 cases) Wholly-owned through acquisition 11.9% Total valid cases: 1173 (130 cases) Total valid cases: 1096 Figure 3.16 Distribution of market orientation by host country Figure 3.18 Distribution of share structure by host country Madagascar 40 2 44 Cameroon 22 42 Kenya 51 30 22 Nigeria 49 69 Côte d'Ivoire 26 18 7 Ethiopia 34 42 Cameroon 41 14 9 Mali 29 33 Ghana 26 8 6 Ghana 20 22 Senegal 40 17 3 Tanzania, UR 47 41 Uganda 58 17 11 Côte d'Ivoire 30 22 Tanzania, UR 60 14 13 Kenya 63 41 Mozambique 102 12 18 Senegal 37 24 Malawi 59 7 10 Mozambique 87 52 Burkina Faso 75 14 5 Burkina Faso 63 36 Mali 49 7 3 Guinea 34 16 Ethiopia 57 4 7 Malawi 55 25 Guinea 45 2 3 Madagascar 60 26 Nigeria 106 5 6 Uganda 79 15 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Local Regional Global Note: Numbers in columns represent frequency for each category 0% 20% 40% 60% 80% 100% Wholly-owned (more than 90% Joint Venture foreign ownership) Note: Numbers in columns represent frequency for each category 22 Africa Foreign Investor Survey 2005
Burkina Faso and Senegalese firms were third most numerous in the Mali sample (annex table 3.3). Figures 3.17–3.18 give the sample distribution in terms of foreign share ownership.Wholly foreign owned firms (more than 90 per cent foreign owned) represent 60.7 per cent of the sample and the rest are classified as joint ventures.These two classifications are further broken down into “greenfield” projects and those where the foreign investor entered through a partial or full acquisition of assets. The joint ventures are split two-to-one between greenfield and M&A and the wholly-owned firms are 80 per cent greenfield. Figure 3.19 Distribution of firms by start-up period Established 2001 and after 24.6% (294 cases) Established between 1991- 2000 41.9% (503 cases) Established 1980 and before 24.1% (289 cases) Total valid cases: 1199 Established between 1981-1990 9.4% (113 cases) Figure 3.20 Distribution of firms’ start-up period by country Guinea Ethiopia Mozambique Ghana Uganda Burkina Faso Tanzania, UR Mali Madagascar Malawi Nigeria Kenya Cameroon Côte d'Ivoire Senegal 2 6 12 4 9 2 10 7 7 16 5 27 3 48 46 10 30 24 33 31 7 24 26 82 36 63 12 13 28 44 9 25 5 8 28 33 11 35 17 16 36 11 1 44 31 25 17 30 12 15 36 17 12 12 16 14 9 6 2 When looking at the individual country samples split along joint venture and wholly-owned categories, Uganda, the country that had the most new arrivals and FEs also has the highest proportion of wholly-owned foreign investments at more than 80 per cent. Madagascar, the country with the most global exporters is second with 70 per cent wholly-owned foreign firms.The small economies Burkina Faso, Guinea and Malawi also have large proportions of wholly-owned firms (between 60 and 70 per cent).At the other extreme are the two largest economies Nigeria and Cameroon with 60 or more per cent of the firms classified as joint ventures. Figures 3.19–3.20 show the sample structure according to entry or start up periods of the firms’ operations. 24 per cent of the firms in the sample started their operations prior to 1980, only 9 per cent started during the 1980s, the largest portion, 42 per cent during the 1990s and 24 per cent since 2000. This distribution reflects survivor bias since many firms that had started operations before 1980 (which is a much longer period than a decade like the other two periods) will have gone out of business or moved elsewhere. There is a striking paucity of firms that started up in the 1981–1990 decade. In addition to failures, this may also be explained by the fact that this was a period of political instability, war or dominance of nationalization policies in many of the survey countries. The high density of firms for the decade of the 90s reflects the upward inflexion point in the FDI stock data for the countries as seen in figures 3.1–3.3. The date of establishment of firms can be used to divide the countries into three groups. The first group of countries consists of those that have a backbone of firms established before 1980 – Senegal, Côte d’Ivoire, Cameroon, Kenya and Nigeria with more than 40 per cent. Firms in these countries are on average between 19 and 23 years old (see Annex Table 3.1). These are also the four biggest economies in GDP terms plus one of the wealthiest in terms of GDP per capita (Senegal) (African Development Bank and OECD, 2005). The second group of countries, Uganda, Ghana and Mozambique, has few firms founded before 1980 but a large proportion between 1991 and 2000. This probably reflects the impact of a period of severe political instability in the 1970s and 1980s. The growing population of new foreign firms can be used to characterize a third group of countries.These countries had firms of which more than a third had been founded since 2000 – Madagascar, Burkina Faso, Tanzania and Ethiopia. The average age of firms in these countries ranges between 7 and 10 years. Established 1980 and before 0% 20% 40% 60% 80% 100% Established between 1981-1990 Established between 1991-2000 Note: Numbers in columns represent frequency for each category Established 2001 and after 3 | An overview of foreign investment in the 15 countries 23
Page 1: Burkina Faso Cameroon Côte d’Ivo
Page 4 and 5: The designations employed and the p
Page 7: Preface Investment is the key to un
Page 11 and 12: Foreword This is a pioneering and m
Page 13: Abbreviations ACP AfrIPANet AGOA AN
Page 16 and 17: Africa IPA Network (AfrIPANet) serv
Page 18 and 19: historical roots and regional marke
Page 20 and 21: cially in the services sector) pay
Page 22 and 23: small, labor intensive manufacturin
Page 24 and 25: mostly subsidiaries of small TNCs,
Page 27 and 28: 1. Introduction Little empirical st
Page 29 and 30: The simplest linkages involve being
Page 31 and 32: One of the objectives of this surve
Page 33 and 34: 2. Survey methodology Outline of th
Page 35 and 36: The initial design of the questionn
Page 37: transformation explains the differe
Page 40 and 41: adds up to higher than the total FD
Page 42 and 43: Figure 3.5 Share of the 15 survey c
Page 44 and 45: Figure 3.8 FDI stock - book value o
Page 46 and 47: Table 3.2 Top-5 foreign investor su
Page 50 and 51: Continuing links with the North Fig
Page 52 and 53: Figure 3.24 Sales, book value, and
Page 54 and 55: The 25 largest companies in the sur
Page 56 and 57: Figure 4.1 Sales according to organ
Page 58 and 59: Figure 4.5 Sales by main sector and
Page 60 and 61: In terms of job creation, it is cle
Page 62 and 63: Figure 4.17 Sales by organizational
Page 64 and 65: clear trend of increasing South com
Page 66 and 67: of Tanzania. In Western Africa, Cô
Page 68 and 69: ook value of South controlled, loca
Page 70 and 71: Figure 4.37 Sales by investor origi
Page 72 and 73: Figure 4.43 Sales in each start-up
Page 74 and 75: Figure 4.50 Share structure distrib
Page 76 and 77: Figure 4.52 Sales by share structur
Page 78 and 79: Entry period (start of operations)
Page 80 and 81: Figure 4.65 Sales by market orienta
Page 82 and 83: Figure 5.2 Investors’ self-evalua
Page 84 and 85: Figure 5.7 Last year’s sales grow
Page 86 and 87: Figure 5.10 Annual sales growth (pa
Page 88 and 89: sales, old L-TNC, is among the lowe
Page 90 and 91: Figure 5.18 Classification tree of
Page 92 and 93: mean and median of the output per e
Page 94 and 95: Figure 5.23 Sales per USD book valu
Page 97 and 98: 6. Impact on the local economy This
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ices firms pay wages that are more
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may be affected by the small size i
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eveals a group of 77 subsidiaries o
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Table 6.2 gives the distribution by
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for accuracy. The whole sample expe
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Figure 6.16 Expected re-investment
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Local content impacts The analysis
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other hand, the thesis, according t
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Figure 6.25 Distribution of main in
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Technology and know-how transfer In
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Figure 6.29 Expenditure on training
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Table 6.17 Number of university gra
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control is of paramount importance
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Table 6.18 Foreign investor’s bra
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Summary Wage and employment growth
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Table 7.1 Exports for main investor
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Figure 7.2 Past and future export g
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Table 7.7 Top regional export desti
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Export markets The long-established
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global exporters’ contribution to
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Table 8.2 Location factors consider
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Figure 8.2 Assessments of changes i
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Figure 8.7 Comparison of importance
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Figure 8.11 Classification tree of
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Figure 8.15 Pre-investment services
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period (average of 15 years) over w
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Figure 9.1 Future employment and in
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taking advantage of the opening up
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associated with FDI. In these count
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Table 9.1 Major characteristics of
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List of tables and figures FIGURES
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Figure 4.65 Sales by market orienta
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Table 3.1 FDI stock - book value of
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Annex table 6.10 Expenditures on su
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a work permit? How many engineers/s
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ANNEX
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Annex table 2.1 Detailed definition
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Annex 2.4 Sample size requirements
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Annex table 3.2 Distribution of for
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BOOK VALUE(in USD) WORKFORCE Number
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Annex: Chapter 4 Annex table 4.1 Sa
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Annex table 4.2 Sales, book value a
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Annex table 4.3 Sales, book values
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Page 192 and 193:
Page 194 and 195:
Annex table 4.6 Subsectors by inves
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Annex: Chapter 5 Annex table 5.1 In
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Annex table 5.7 Last year’s sales
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Annex table 5.13 Annual sales growt
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Annex table 5.19 Sales per USD book
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Annex: Chapter 6 Annex table 6.1 Wa
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Annex table 6.3 Annual employment g
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Annex table 6.6 Ratio of expected r
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Percentage of local content MEAN ME
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Annex table 6.11 Expenditure on tra
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Annex table 6.14 Proportion of univ
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Annex table 6.16 Proportion of expa
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Annex figure 6.1 Classification tre
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Annex figure 6.5 Classification tre
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Annex: Chapter 7 Annex table 7.1 To
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Annex table 7.4 Export growth (past
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Annex: Chapter 8 Annex table 8.1 Lo
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Annex table 8.4 Ranking of countrie
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Annex figure 8.1 Assessment of chan
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Economist Intelligence Unit (EIU) (
Page 236:
Printed in Austria March 2007 UNITE
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