In an op-ed for Banker Africa magazine, Christian Toben, regional head of Africa at Commerzbank, sets out the challenges facing foreign direct investment (FDI) flows to the continent, and looks for ways to bring them back up to scratch.
FDI has been vital to the growth of Sub-Saharan Africa’s economies. Inflows were promising over the last decade, reaching an all-time high of $44 billion in 2014. Yet in the article ‘What is the future for FDI to Sub Saharan Africa?’, Toben shows that since mid-2014’s crash in commodity prices, diminished national coffers, increased public and external debts, and poor outlooks for important agricultural and extractive industries have all reduced the confidence of overseas investors. He warns that overall levels of FDI in 2016 across the region may, as a result, drop to nine-year lows.
Toben looks to diversification of the region’s economies as a way of spurring a revival in FDI – suggesting that new manufacturing industries, agricultural development, improvement of infrastructure and a boost to the services sector could all help attract new investment. Key to this recovery, he explains, will be partnership between local African banks and global financial institutions that can facilitate international trade.
The article may be read on pages 34-36 of the magazine here.