Cleantech is driving a rebound in FDI flows to Africa
Data from the EY Africa Attractiveness Report indicates a significant rebound in foreign direct investment (FDI) into Africa in 2022, with the cleantech sector emerging as a primary driver of these investments. The report underscores the importance of African governments implementing reforms to attract the critically needed next generation of FDIs.
In an interview with CNBC Africa, Damilola Aloba, a partner at Ernst & Young, discussed the key findings of the report and provided insights into how Africa can maximize the attention it is currently receiving.
Aloba highlighted the challenges faced by FDI in Africa, pointing to global shocks such as the Covid-19 pandemic and the Russia-Ukraine war. These events eroded investor confidence, leading to caution in committing capital to African markets. Travel restrictions and disruptions in the global supply chain exacerbated the situation, hindering investment processes and creating vulnerabilities in sectors such as tourism, hospitality, and manufacturing.
Looking ahead, Aloba underscores the critical importance of Africa shifting its focus towards sectors such as cleantech to attract more foreign direct investments (FDIs). The continent is already garnering attention in emerging industries like the electric vehicle space and minerals. To capitalize on this attention, Africa must implement investor-friendly policies, expedite reforms, enhance technology and infrastructure capacity, invest in skills development, and prudently manage public finances. These strategic measures, coupled with a commitment to economic diversification, will play a pivotal role in accelerating FDI inflows into African countries.