Africa Foreign Investor Survey 2005 - unido

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Figure 4.1 Sales according to organizational structure Organizational structure Sum Billions of USD 10 9 8 7 6 5 4 3 2 1 0 34.4 9.7 11.2 Large Transnational Corporation (L-TNC) 11.0 Significance: F(2,1061)=24.532, p
Organization structure – main sector Figure 4.4 shows how the main sectors are represented within the three organizational structure categories (frequency cross-tabs) and figures 4.5–4.7 and annex table 4.1 describe the size of the firms comprising each main sector within the organizational structure groupings. As mentioned earlier the primary sector is under represented in the sample due to selection criteria that excluded all extractive sectors and even agricultural foreign investors are most likely under represented.The 7 subsidiaries of primary sector (agriculture) L-TNCs in the survey had the largest workforces. Four agro-industrial L-TNCs, established before 1981, employed on average more than 5,000 people each.The average book value of a primary sector L-TNC subsidiary was $24 million with a workforce of over 5,400.The 28 FE primary sector firms (mostly in horticulture) were, by contrast, much smaller, with an average book value of $1.4 million and a workforce of 269. The 136 manufacturing subsidiaries of L-TNCs generated the highest average sales revenue – $37 million – followed by L-TNC service sector firms with sales of $33 million. Amongst the subsidiaries of L-TNCs there were some very large services sector companies. The average book value was over $65 million, yet half had book values under $3 million implying a highly skewed size distribution in the sample of services sector firms.This is a result of aggregating financial services companies that have high average book values with other services such as professional services that have average book values that are very small. In the period 1991–2000, for example, 13 large logistics companies, average book value $93 million, and 17 financial services companies, average book value $75 million, were established. At the other end of the scale, half of the 325 FE manufacturing firms participating in the survey had book values of less than $1 million, although the average book value was $7 million, again reflecting significant dispersion in firm size.The 242 FE service sector firms were even smaller – half had book values and annual sales of less than $710,000 and half employed 30 people or less. However the average book value of FE service sector firms of $12.5 million indicates there were also several large services firms in the FE sample. Looking at just the manufacturing sector, the L-TNC subsidiaries are three times the sales size of the S-TNC subsidiaries and nearly five times that of FEs. However the total sales of manufacturing FEs is 50 per cent larger than that of S-TNC subsidiaries and only half of the total sales of the L-TNC subsidiaries. The total employment of manufacturing FEs is higher than the total employment of the manufacturing S-TNC and L- TNC subsidiaries. Again, as a group, the FEs are very important in terms of sales and, especially, employment generation. Organization structure – period of entry Figure 4.8 shows how the three organizational structures are represented by the firms that started operations in the four period categories (frequency cross-tabs). Figures 4.9–4.11 and annex table 4.2 describe the size of the firms for each organizational structure group within the four start-up periods. As might be expected, most of the well-established subsidiaries of large TNCs set up their operations before 1981 and these 132 companies have the highest medians for all the size measures used. They also dominated the annual sales reported by firms participating in the survey – with a share of more than 36 per cent of total sales reported by the whole survey sample. Moreover this tendency of older firms to dominate sales statistics was repeated by the sample of subsidiaries of small TNCs and FEs. For each organizational structure group, the older companies were in general larger than the younger companies. What was less expected was the sharp decline in the proportion of L-TNCs in the population of more recent investors. While some 45 per cent of investors that had arrived before 1981 were subsidiaries of large TNCs, after 2000 the proportion dropped to just over 10 per cent. Nevertheless, of these 32 L-TNCs that started operations since 2001, some represented very large investments by mobile phone and energy companies that have been taking place recently. As a consequence, L- TNCs established after 2000 had a significantly higher average book value ($78 million) than those subsidiaries established before 1981 ($58 million) as well as higher average sales ($58 million as opposed to $44 million). However, the much smaller median for sales and book value for the post 2000 L-TNCs ($1 million and $ 2 million respectively) shows the wide dispersion in size and indicates that the group is dominated by a small number of very large subsidiaries. Figure 4.8 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Organizational structure by start-up period 98 55 132 62 23 251 135 27 115 175 1980 and before 1981-1990 1991-2000 2001 and after Significance: Chi(6,1190)=101.152, p
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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 48 and 49: majority of firms global exporters
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 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
Page 99 and 100: ices firms pay wages that are more
Page 101 and 102: may be affected by the small size i
Page 103 and 104: eveals a group of 77 subsidiaries o
Page 105 and 106: 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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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) (
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Printed in Austria March 2007 UNITE
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