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Africa Investment Opportunity Overview

Africa Investment Opportunity Overview

Image from The Africa Report

According to relevant research, there are 2,599 foreign direct investments (FDI) by South African companies in other parts of the African continent. The financial, insurance and business services sectors are leading the way in overseas investment, followed by wholesale and retail as well as manufacturing.

The biggest FDI is by Bidvest, followed by Standard Bank, which secured 28% of its headline earnings from these investments in its last financial year. Imperial Logistics obtained 26% of its profit from Africa.

While ShopRite does not feature in the top 10, it has 22 subsidiaries operating 419 stores in 14 countries outside South Africa, making it the biggest South African player in the retail space on the continent. It derives 16% of group sales from its African footprint.

While the Egyptian retail market has proved difficult historically, the Who Owns Whom report on the Wholesale and Retail of Food in Egypt shows that the grocery market is still dominated by a large number of small family-run stores, creating an opportunity for retail chains which has been quickly seized on by France's Carrefour, the United Arab Emirates' Spinneys and LuLu and Turkey’s BIM. But modern retail channels still account for only 20% of sales.

Some research shows that in Ethiopia identifies no fewer than five leading Chinese state-owned corporations active in Ethiopian infrastructure development: China Civil Engineering Construction Corporation, Chinese Communications Construction Company, China Railway Engineering Corporation, China Road and Bridge Corporation and China State Construction Engineering Corporation.

In May 2018, Guinea approved the development of a bauxite mine, port, railway and power station by China’s TBEA at a cost of $2.9bn following a September 2017 agreement with Guinea to loan the country $20bn over 20 years in exchange for bauxite and alumina projects.

Chinese enthusiasm for investment in Africa does present opportunities for some South African companies, like Standard Bank, with its well-established footprint in Africa. The Industrial and Commercial Bank of China (ICBC) is a 20% shareholder, and Standard Bank is using this to "leverage the ICBC relationship to support the growth strategies of the Chinese multinationals operating in Africa".

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