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AFRICA MACRO

ANALYSIS AND STRATEGY

investment in Africa have, in recent years, been amongst the highest in the world. While corruption remains a problem in some countries, many nations have taken strong measures to curb this scourge. Botswana, Mauritius, Seychelles, South Africa, Namibia, Ghana and Rwanda are all ranked higher than Italy and Brazil in the 2010 Corruption Perception Index which is compiled by Transparency International. Malawi is rated less corrupt than India and Egypt, Burkina Faso, Swaziland, Gambia, Djibouti and Liberia are ranked ahead of Mexico.

Africa Corruption Index

(measured by book value) surged 259.1% to $553.972 billion between 2000 and 2010. This was equivalent to 33.4% of Africa’s GDP. In 1995, FDI was equal to just 16.8% of GDP. It is not the traditional major economic or former colonial powers who are leading the way in direct investment in Africa. In fact, they are lagging behind. Instead, China and India have been increasingly dominant as they seek to gain access to the raw materials and oil they need to support their growing economies. These countries are making loans and investments to upgrade the infrastructure, explore for oil and increase the electricity supply all across the continent Brazil is making inroads into Africa, particularly in the Portuguese speaking countries of Angola and Mozambique, and Turkey is increasing its presence, particularly in North Africa and South Africa. Korean companies are beginning to recognize the importance of Africa. For example Posco, HSG Industries, and LG Electronics have announced plans to build manufacturing plants in South Africa. Samsung Electronics has operations in South Africa and Nigeria and will be entering the Kenyan market by the end of 2011. Bilateral trade between Korea and Africa meanwhile jumped from $6.4 billion in 2000 to $13.9 billion in 2009.

Irrespective of the increasing interest and activity from these countries, Africa would welcome more U.S. and European investment to dilute the current economic concentration of capital coming from Asia.

Source: Transparency International th

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In the late 19 and early 20 century, there was a scramble on the part of the major powers to carve up Africa into colonies. The British and the French came to dominate the continent. Now there is a new scramble on the part of foreign investors to gain access to Africa’s abundant riches of minerals, oil and natural gas and its growing consumer market. The strong growth in Africa and the reduction of barriers to trade and investment have led to an explosion of Foreign Direct Investment (FDI) particularly into the oil, natural gas, hydropower and telecommunications sectors. There has also been active foreign interest in the agriculture, banking and retail sectors. According to the data from the UNCTAD, FDI Joab’s Technologies and Research, Natu Court Flat B.

Geography Africa is the second largest and second most populous continent after Asia. Including adjacent islands, it covers a territory of 11.7 million sq miles. This is equivalent to 6.0% of the world’s surface and 20.4% of the total land area. Africa comprises 54 countries, 2 unrecognized states; Somaliland and Sahrawi Arab Democratic Republic and ten colonies and Page 10 of 104

Equity Research in Africa, Like an Electric Train Africa is picking up, a True Emerging Market  

Economic analysis of Africa as a whole, as well as of particular countries and sectors, with special regard to their potential as investment...

Equity Research in Africa, Like an Electric Train Africa is picking up, a True Emerging Market  

Economic analysis of Africa as a whole, as well as of particular countries and sectors, with special regard to their potential as investment...

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