Africa Foreign Investor Survey 2005 - unido

Share structure – period of entry
Figure 4.51 gives the share ownership structure for the age
groups. Figures 4.52–4.54 and annex table 4.4 describe the
respective sizes of the wholly foreign owned firms and joint
ventures within each age group.
In a favorable investment climate for foreign companies,
it might be expected that over time, with the accumulation
of greater operational experience, foreign investors
who deem their investments to be a success would
takeover their local partner in order to obtain the benefits
of complete managerial control. This is not observed in
the data. The proportion of joint ventures was higher
among firms that had been in the country longer. Thus,
of the 289 firms established before 1980, 53 per cent were
joint ventures, while of the 294 firms established after
2001, only a third were joint ventures. Even more striking,
when sales and book values were compared, it was
clear that regardless of the time period in which firms
started operations, joint ventures had higher average sales
and book values than wholly foreign owned companies
founded in the same time period. Again, the older, larger
TNC subsidiaries are more likely to be joint ventures,
supporting the notion that investors that have been in the
country longer have had better opportunities to acquire
more assets, likely through partial buyouts.
The finding that only a third of firms in the survey
founded after 2001 were on the basis of joint ventures
could be interpreted as a positive sign indicating that an
Figure 4.51 Share structure distribution in each start-up
period
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
155
136
53
60
increasing proportion of inward investors were willing to
go-it-alone in sub-Saharan Africa. On the other hand, the
average book value of joint ventures founded after 2001
remained much greater than for WOEs – $37.5 million
compared to $4.3 million. However, this was largely a
result of the contribution of 13 large joint ventures in the
utilities and transport services subsector. Even so the
median joint venture had a book value of $1.5 million
compared to the median book value of a WOE of just
$600,000.
195
308
96
198
1980 and before 1981-1990 1991-2000 2001 and after
Significance: Chi(3,1201)=28.963, p