2. EXECUTIVE SUMMARY
GENERAL OVERVIEW OF FOREIGN DIRECT INVESTMENTS IN AFRICA
ECONOMIC GROWTH EXPECTATIONS IN FRANCOPHONE AFRICA
MAIN SECTORS TO INVEST
CONCLUSION
BIBLIOGRAPHY
CONTENT
3. EXECUTIVE
SUMMARY
The Francophone Africa represents 31 African countries with more than 120 millions
French speakers and these digits are increasing fast. It is the most French-speaking part
of the world and it includes countries that have French as 1st
or 2nd
official language.
If we have a look at the 20th
fastest growing GDP in the World, 4 of them are located in
the Francophone Africa region (Guinea, Republic of Congo, Ivory Coast and Rwanda).
All these countries have a common point ; the value of their Compound Annual Growth
Rate (CAGR) is very high from 2013 to 2017. It means that it is nowadays time to
invest in these countries for a long term profit.
The presence of Swedish firms is still quite seldom in Africa while the macro-economic
environment seem to be optimal in this region. Some sectors are obviously more
flourishing than others.
The main sectors where FDI outflows could be the most profitable are the Oild and Gas
one, the Mining, the Infrastructure, the Consumer Goods, the Banking and the
Agriculture ones.
However, industrialized countries are sometimes reluctant to invest in these countries
where corruption is still too much present in the mindset.
4. GENERAL OVERVIEW OF FOREIGN
DIRECT INVESTMENTS (FDI) IN AFRICA
Countries with low and fast growing GDP should be
prioritized for the initial investments.
Among the industrialized countries, Sweden is
ranked as 12th
for the Global FDI outflows,but only
ranked 17th
in Africa.
Nowadays, there are about 100 swedish firms which
already set up a subsidiary in Africa.
However, most of them are based in South Africa
and the Francophone countries are often
disregarded.
List of Francophone Countries in Africa :
- Mali
- Niger
- Algeria
- Morrocco
- Tunisia
- Mauritania
- Chad
- Burkina Faso
- Ivory Coast
- Guinea
- Senegal
- Benin
- Togo
- Gabon
- Republic of Congo
- Democratic Republic of Congo
- Cameroon
- Central African Republic
- Rwanda
- Burundi
- Djibouti
- Comoros
- Equatorial Guinea
- Madagascar
- Seychelles
-Mauritius
5. GENERAL OVERVIEW OF FOREIGN
DIRECT INVESTMENTS (FDI) IN AFRICA
Digits about the Swedish Economy :
Population: 9.5 million
GDP (PPP): $393.0 billion
GDP growth : + 1.2%
1.0% 5-year compound annual growth
GDP per capita : $41,191
Unemployment rate: 7.9%
Inflation (CPI): 0.9%
FDI Inflow: $13.7 billion
Swedish Index of Economic Freedom Swedish FDI outflows decreased a lot from 6,3% of its
GDP to 1,9% between 2009 and 2013.
This is mainly due to the latest economic crisis.
However, the FDI outflows jumpstart should occur in
2014, based on the OECD statistics.
6. GUINEA
Guinea is ranked 3rd
among the fastest growing GDP (CAGR) in the World.
From 2012 to 2013 its GDP rose of +5.01%
Estimation from 2013 to 2017 →
GDP CAGR: +16.27%
Economy: Guinea is considered among the world’s richest country in natural resources,
possessing half of available bauxite reserves. It is similar with iron ore, gold, and diamonds.
As many African States, corruption is the nation’s primary barrier to economic growth. Access
to international aid and foreign investment is contingent upon addressing this issue.
7. Republic of Congo is ranked 11th
among the fastest growing GDP (CAGR) in the World.
From 2012 to 2013, its GDP grew by +5.29%
Estimation from 2013 to 2017 →
GDP CAGR: +9.31%
Economy: Congo mainly relies on oil exports and their projected growth is linked to rising oil
prices. Unfortunately, decades of chronic civil war contribute to an unstable business
environment that keep posing a threat to economic growth. Serving the nation’s debt obligation
is also proving a challenge, and the Republic of Congo received nearly $2 billion in debt relief
via the International Monetarian Fund in 2010.
REPUBLIC OF CONGO
8. Ivory Coast is ranked 17th
among the fastest growing GDP (CAGR) in the World.
From 2012 to 2013, its GDP increased by +6.99%
Estimation from 2013 to 2017 →
GDP CAGR: +8.63%
Economy: The Ivory Coast is the world’s largest producer and exporter of cocoa beans, and
also produces and exports an important amount of other commodities, such as coffee, palm oil,
and gold. Foreign investment has been reduced due to political instability and civil war that
still occur nowadays, which threaten the nation’s economic growth.
IVORY COAST
9. Rwanda is ranked 20th
among the fastest growing GDP (CAGR) in the World.
From 2012 to 2013, its GDP increased by +7.50%
Estimation from 2013 to 2017
GDP CAGR: +8.23%
Economy: Rwanda's GDP started from a very low level. It is thus easier to obtain a fast-
growing economy in pourcentage, compare to developed European economies or the United
States. However, over 90% of the workforce is engaged in subsistence farming. The Rwandan
government has decided to invest in information technology (I.T) as well as education in order
to promote sustainable economic growth.
RWANDA
10. MAIN SECTORS TO INVEST
Telecommunications :
(Africa's mobile Market) → + 43% each year
Banking :
Africa’s banking sector has grown rapidly in the last
decade. Sub-Saharan Africa has become a substantial
player in emerging-market banking, with total 2008
assets of $669 billion, while North Africa’s asset base
has grown substantially, to $497 billion.
11. MAIN SECTORS TO INVEST
Agriculture :
Agriculture represents 15% of the total African GDP.
Its production is highly fragmented compare to industrialized countries and there is a lack of
transportation infrastructure to well establish a strong supply chain in this field. To make it
better, experts think that $50 billion would be enough.
Mining :
Africa is full of natural ressources such as minerals. However, these ressources have not been
well exploited lately and the potential remains really exceptional.
Infrastructure :
The transportation network is still quite inefficient. However, this sector has a rise in average
of 17% each year in this part of the World. The Infrastructure growth is primordial to develop
other sectors.
Consumer Goods :
Many consumers have moved from the destitute level of income (less than $1,000 a year) to
the basic-needs ($1,000 to $5,000) or middle-income (up to $25,000) levels.
They are thus able to spend more money in consumer goods.
Oil and Gas :
African oil and gas have become important components of the world’s hydrocarbon supply–
demand balance. By 2015, 13 percent of global oil production will take place in Africa. The
continent is really cost competitive compare to other countries.
12. To be a more competitive country in the globalisation context, Sweden should
seriously consider investing in the Francophone African countries.
The country uses to be present abroad to develop its economy since the Swedish
market is narrow. Sweden is thus really interdependent to its neighbour countries
and should take the opportunity to invest in the fast-growing economies.
To set up subsidiaries in this World region, it is necessary to employ French
speaking workers, specially in the strategic departments such as the financial,
supply chain and marketing ones.
Swedish companies need links between their headquarters and subsidiaries to
implement meticulously their strategies abroad and control carefully the daily
activities.
The prioritized sectors must be the ones where Swedish companies are known all
around the world to be competitive, such as consumer goods, infrastructure,
banking and telecommunication.
The main issue for Western countries to invest in Francophone African countries
remains their image regarding corruption, which contrasts totally with the Swedish
mindset. Some efforts have to be done in these countries to relieve the Western
countries concerns.
CONCLUSION
14. Business Insider : The 20 Fastest Growing Economies In The World, October 24th
2012, from Lucas
Kawa
Swedish FDI in Africa, May 5th
2012 Uppsala University, from Martin Boman & Christian Hellqvist
2014 Index of Economic Freedom
CNUCED : Economic Development in Africa, Annal Report 2013
Africa’s path to growth: Sector by sector, Mc Kinsey & Company
World Bank Datas
OECD Foreign Direct Investment (FDI) Statistics, 2013
BIBLIOGRAPHY
