Africa Foreign Investor Survey 2005 - unido

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
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