EY-africa-attractiveness-survey-june-2015-final

www.ey.com/attractivenessCase studyGeneral Electric (GE)GE, a US-based multinational manufacturer withproducts ranging from pumps to medical scanners, hasbeen present in Africa since 1898. In 2013, it achievedsales of US$5.2b in Africa. Responding to rising Africandemand, in August 2014, the company announcedthat it would invest up to US$2b in Africa and doubleits workforce on the continent to 4,000 during the fiveyears to 2018. Its investments would be focused uponthree areas: developing facilities, improving its supplychain and training workers.GE is benefiting from the drive to improve Africa’sinfrastructure. It has won substantial contracts tosupply power generation equipment in Algeria, Nigeriaand Angola. It is supplying railway locomotives inAngola and South Africa. GE has been working withthe engineering arm of South Africa’s national railoperating company, Transnet, to assemble locomotivesin-country. It is also investing in health programsacross Africa.Sources: “GE Sees $2 Billion Africa Spending, Doubling of Workforce,”Bloomberg website, www.bloomberg.com, accessed 20 April 2015;“Building Africa’s Growth Engine: GE to Invest Billions in Continent’sPeople, Infrastructure, Manufacturing,” GE website, www.gereports.com, accessed 20 April 2015.Intra-African investment: fewer projects, more jobsIntra-African investment was again the second-largest sourceof FDI, though its share of projects eased from 24.5% in 2013to 19.2% in 2014. South African companies ranked as thecontinent’s second-biggest investor group, launching 53 projectsin 2014, down from 65 the previous year. Though they provided7.2% of projects during the year, they invested only 4% of thecontinent’s FDI capital inflow and provided relatively few jobs.Investors from Nigeria and Kenya, two other African FDI dynamos,were also less active in launching projects. Moroccans, on theother hand, became more prominent investors, initiating 13intra-African investments last year — the highest in over a decade.Moroccan companies are looking toward SSA as the countrybecomes a platform for exporting to African countries. Moroccanchampions, including Saham Insurance Company, AttijariwafaBank, Groupe BCP and Maroc Telecom, are meantime expandingin Africa, rather than slow-growth Europe. 22UK investors flag, while French and PortugueserecoverWhereas UK investors were at the forefront in 2013, they slippedto joint-second place in 2014, alongside those from South Africa.Projects from UK companies more than halved to just 53 in 2014.They made many fewer investments in consumer-facing sectors,particularly TMT, financial services and business services.But European investors, profiting from historic business, cultural,language and transport ties, continued to dominate the AfricanFDI scene. French investors were more active, initiating 49projects (+25.6%), creating 12,373 jobs and providing a chunky14.8% of African FDI capital inflows. Their projects were diverse,but centered upon TMT, transport and logistics and CPR. Eighteenof the French corporate projects were in Morocco, which remainsa near and popular destination (though South Africa and Nigeriawere their next favorite targets). French bank BNP Paribas set upcorporate and investment banking activities in Casablanca, whichis striving to develop as an African financial hub. 23Portuguese companies more than doubled the number of FDIprojects they launched in Africa to 27 in 2014. More than 70%of their investments were in financial services, with Mozambiquethe primary destination, aided by strong cultural and languageties. Other projects were in automotive and diversified industrialproducts (DIP).22 “Morocco looks south as Europe stagnates,” Financial Times website, www.ft.com, accessed 17February 2015.23 “Finance: Casablanca Finance City announces BNP Paribas Regional Investment Company CFCStatus,” Casablanca Finance City website, www.casablancafinancecity.com, accessed11 February 2015.EY’s attractiveness survey Africa 2015 Making choices19