CleanTech becomes leading Foreign Direct Investment into Africa for first time as FDI rebounds strongly
8 Nov, 2023

Sandile Hlophe, EY Partner and Africa Region Government & Infrastructure Leader


  • South Africa attracted most FDI in Sub Saharan Africa with 157 projects, 15 000 jobs
  • Number of FDI projects in Africa rose 64% over prior year, worth $194bn
  • UAE surprising prominent with $50bn new investment 


EY’s 11th annual Africa Attractiveness Report, which provides an in-depth analysis into FDI (Foreign Direct Investment) and economic progress in Africa, revealed that CleanTech led the FDI drive into Africa for the first time against a backdrop of a substantial overall recovery of FDI on the continent.


Technology and Business services are placed 2nd and 3rd respectively.


It showed that Africa attracted 733 projects worth $194bn and created 154 000 jobs.


The report considers the calendar year period to the end to December 2022; with a subsequent FDI flow review to June 2023.


Sandile Hlophe, EY Partner and Africa Region Government & Infrastructure Leader, said: “CleanTech FDI is being driven by a ‘green revolution’ sweeping across Africa.


“Although the business services sector creates the most projects, CleanTech FDI brings in more capital and is also ahead in the number of jobs it creates.


“Africa is clearly beginning to harness its renewable energy infrastructure.


“South Africa, Egypt, Morocco and Kenya account for nearly 75% of all renewable energy investment since 2010, amounting to $46bn.


“However there remains a huge deficit of clean energy like solar and wind, with fossil fuels still making up the bulk of Africa’s power generation.”


The International Renewable Energy Agency (IRENA) and the African Development Bank (AfDB) estimate the continent’s solar PV potential at 7 900GW, hydropower at 1 753GW and wind energy at 461GW.


South Africa leads FDI in Sub Saharan Africa


South Africa attracted the most FDI projects in Africa, making up 23% of the continent’s total, at 157 — and the highest since at least 2016.


Its FDI was valued at $26.8b and created approximately 15 000 jobs.


South Africa is the third-largest recipient of CleanTech FDI into Africa, trailing only Egypt and Morocco.


Evidence suggests that solar rooftop photovoltaic (PV) rose from 983MW in March 2022 to 4 412MW by June 2023. As the energy crisis continues, the shift from the national grid escalates the need for alternatives.


SA is expected to increase its share of renewable energy to 41% by 2030.


“South Africa’s FDI creates the most jobs in the region by a considerable margin and attracts the bulk of the region’s capital, despite its weak economic performance and growth outlook,” Hlophe noted.


By source, the U.S. and the UK were the largest investors, followed by Switzerland and Germany. The UAE has also increased its presence, investing in CleanTech capital-intensive projects valued at $50bn, accounting for three-quarters of the country’s total inflows.


FDI from the UAE created 3 000 jobs in the country.


“Business services, along with technology, dominate South Africa’s FDI, with the real estate sector generating the most capital and employment,” Hlophe added.


African FDI bounces back strongly after 2020 wipeout 


Africa’s FDI halved in 2020, making it the hardest-hit region globally but since then has bounced back impressively – particularly within the North and Southern African hubs.


Said Hlophe: “North Africa attracted more FDI than any other region in Africa, led by Egypt. North Africa attracted the most investment projects (248, 112% up on 2021) with record capital investment of US$130b creating 89 000 jobs.”


Overall FDI project numbers rose 64%.


Morocco and Tunisia were the second and third most successful countries attracting FDI in North Africa.


In the Southern Africa hub, Zimbabwe and Zambia followed South Africa with Capital flows of $5.2bn and $1.7bn respectively.


Kenya dominates in East Africa, and Nigeria in West Africa, the 3rd and 4th largest FDI regions.





@Sandile Hlophe
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