African cities have continued to benefit from sustained Foreign Direct Investments (FDI) coming from the rest of the globe. The World Bank’s State of African Cities report highlights the developments in Africa’s FDI over the past few years.
The report says shows that four major cities, strategically located at important locations on the continent are FDI destinations in Africa: Cairo in Northern Africa, Lagos in Western Africa, Johannesburg in Southern Africa and Nairobi in Eastern Africa.
Much of the investments flowing into Africa comes from Western Europe (38%), followed by Asia(20%) and North America (15%). North America invests mostly into Central (32%) and Western Africa (18%), arguably due to commodities like oil.
In the ranking FDI for African cities between 2013 and 2016, the report indicates that Cairo holds the first place in Africa in terms of volume of FDI attracted, followed in second place by Johannesburg, and Tangiers. Nairobi was ranked eighth.
Most of the FDI for East Africa comes from Western Europe (27%), Asia and Pacific (22%), other African countries (20%) and North America (14%). Furthermore, FDI forecasts for Eastern Africa show that service investments will see the highest growth rates over the next four years.
China’s biggest city, Shanghai, leads global rankings for foreign direct investments, followed by Singapore and London. According to the report, the largest sources of FDI globally are Paris, Tokyo and London.
Cairo (64th) and Johannesburg (69th) did quite well in the global investment rankings. However, no African city was ranked within the top-10 FDI recipient cities globally.
Most FDI in Africa passes directly or indirectly through Johannesburg, the FDI capital of Africa, followed by Nairobi and Lagos making these cities strategic gateways for investors wanting to get into the African investment arena.
There is also a significant amount of FDI between African cities. The top-five investors in Africa from Africa are from these cities; Johannesburg, Casablanca, Lagos, Nairobi and Cairo.