The global companies are more and more interested in targeted investment in the sub-Saharan Africa. However, it is not yet certain that the high hopes for the region will materialize. The Frontier Markets Index found that Nigeria tops the list among the most attractive frontier markets, where the major European and US multinationals are interested in pursuing investments in the region. This is the largest economy in sub-Saharan Africa and it is growing very quickly.
Despite the overall optimism, the private sector is not yet aware of when investing in Africa will pay off. The Singapore-based trader of agricultural commodities and food Olam International is present in 25 African countries, having invested more than 1 billion USD in the region. Although the company started business in Nigeria during the late 1989, the analysts are less than enthusiastic about its ability to generate returns on the continent. The Olam’s fertilizer business in Gabon will likely be long-term headache, according to the analyzers. The project, which was released in 2010, was initially expected to be operational by the first half of this year. However, still has not started due to problems related to cost overruns due to difficulties gas.
As in many emerging markets, the business of the continent is hampered by corruption, poor infrastructure, political instability and dysfunctional governments. However, the foreign investment in the continent show no signs of fading. Foreign investment is expected to exceed 80 billion USD this year, according to a joint report by the Organisation for Economic Cooperation and Development and the African Development Bank from May
Overall, Africa has become the second most attractive investment destination in the world last year, staying just behind North America. The continent boasts a growth share of global foreign direct investment to the highest level in 10 years – 5.7%, according to a report EY.