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With some countries reaching a double digit GDP (Gross
Domestic Product) growth for several years in succession,
Africa's is forging a reputation as a good investment
destination.
Africa's economies are being shaped on better fundamental
economic strength than in the past, with governments reducing or
stabilizing budget deficits, falling public debt and donor
cancellations, a better mastered inflation, a higher
productivity, all benefitting the local commercial sector.
"It's time for Africa prime time"
AFRICA REPORT
Morever, most countries have been creating a legal
environment more conducive to attracting a greater flow of
foreign direct investment, and a better skilled and multilingual
workforce is being trained both in Africa and overseas.
Therefore, it's not surprising that besides multinationals
from former colonial powers, there is a higher interest of
emerging economies (Brasil, China, India and others) in trading
with the continent, that are gradually bringing in capital and
the so-needed supply of machinery and other equipment for
building the infrastructure and to establish a manufacturing
industry.
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5 HIGHEST FOREIGN DIRECT INVESTMENT INWARD FLOWS IN 2004 (In
millions of dollars)
SOURCE: UNCTAD 2005 (TD/STAT.30)
- NIGERIA (2127)
- ANGOLA (2048)
- EQUATORIAL GUINEA (1664)
- SUDAN
(1511)
- EGYPT (1253)
A bright outlook
Growth forecasts are good and some African countries like
Botswana were ranked in 2005 amongst the world's top 30
economies, by the Index of Economic Freedom, published by the
Heritage Foundation and the Wall Street Journal.
In 2004, five countries had recorded two-digits GDP growth
rates, with Oil and/or Gas the main reason in three of them.
TWO-DIGITS GDP GROWTH ECONOMIES (2003-04)
- CHAD (31.0)
- LIBERIA (19.7)
- EQUATORIAL GUINEA (13.6)
- ETHIOPIA
(11.6)
- ANGOLA (11.2)
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Freer Economies
Most core restrictions on capital transactions of foreign
exchange accounts have been lifted and in most countries,
foreigners have access to credit on the local market, while the
fiscal burden is being lowered.
Judicial systems have improved and governments have
heightened efforts in combating crime and corruption.
Attracting attention of investors
Due to new oil discoveries and exploitation in countries like
Angola, Chad, Equatorial Guinea and throughout the Golf of
Guinea, but also new gas production, the volume of Africa's
exports has significantly increased in the recent years,
attracting more investors.
While Africa has been absent from the list of the world's top
25 most attractive FDI destinations from 1998 to 2004, A. T.
Kearney's latest FDI Confidence Index mentioned South Africa as
one of the most favored destinations for transportation
equipment manufacturers.
The Index is a leading indicator of where the world's leading
companies are likely to spend in foreign direct investment the
next 12-24 months.
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