FTI CONSULTINGS ANNUAL RESEARCH ON AFRICA

Investment outlook positive as

Africa engages with reforms

The outlook for investment activity across Africa is looking very

promising, particularly in Eastern Africa and Sub-Saharan Africa and
the outlook has improved significantly for North Africa, according to a
new survey of informed opinion leaders on Africa by FTI.

Changes to Investment Types The outlook for investment activity

Q. Which of the following types of investment into Africa is expected to change over
across Africa is looking very promising,
the next 12 months? (Please select one column response for each row) particularly in Eastern Africa and
Sub-Saharan Africa and the outlook has
All investment overall 22% 51% 15% 9% improved significantly for North Africa,
All investment overall
Next generation communications infrastructure
according to a new survey of informed
56% 31% 10%
re (i.e. fibre and(i.e. fibre and mobile broadband networks)
mobile broadband networks) opinion leaders on Africa by FTI.

Public-Private Partnerships (PPPs) 37% 44% 16% Nearly three-quarters of respondents

Public-Private Partnerships (PPPs) indicated they believed overall investment
Traditional infrastructure (i.e. transport, energy,
schools, hospitals)
31% 51% 13% in the continent would increase over
ture (i.e. transport, energy, schools, hospitals)
the next 12 months. As well, 85% of
Joint Venture 18% 48% 23% 8% respondents said they were positive
Joint Venture
Investment for financial restructuring (existing
in their general outlook for investment
13% 49% 27% 9%
shares for debt repayment or loss reduction)
g shares for debt repayment or loss reduction) activity in Africa over the next 12 months.
Extension of capital (newly issued shares for For East Africa, 90% of respondents said
expanding business operations) 12% 58% 18% 7%
ed shares for expanding business operations) they were positive, while 80% said they
Mergers and Acquisitions (M&A) 12% 49% 25% 10% were positive about Sub-Saharan Africa.
Mergers and Acquisitions (M&A) For North Africa, the percentage of those
Greenfield Investment (A new subsidiary or saying they were positive doubled over
holding company in a new country)
7% 44% 32% 13%
sidiary or holding company in a new country) the past 12 months to 66%.
Significantly Slightly 0 No 20 40 Slightly 60 80
Significantly 100
increase increase change decrease decrease

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Outlook for Investment Activity across Africa Rwanda is an excellent example of how an African countrys
Q. What is your general outlook for investment activity in the
government can work to attract international investment,
following locations over the next 12 months? (Please select one says Joel Kibazo, Managing Director at FTI Consulting. The
column response for each row) country rose three places in the World Banks Doing Business
rankings, with notable improvements in the ability to start
Africa overall 10% 75% 15% a business, register a property, trade across borders and
enforce contracts. Its attracted investment from China
Eastern Africa 47% 43% 10% and Australia, as well as from other countries within Africa.
Alongside Kenya, it is becoming a technology hub in the region.
Sub Saharan Africa 25% 54% 20%

West Africa 25% 53% 15% 7% Learn by example

The new survey highlights what other African countries could
Southern Africa 17% 48% 25% 10% learn from these successes to help attract more foreign and
regional investment, to help boost their economies. The
North Africa 8% 58% 24% 10% survey shows that opinion leaders believe there is significant
opportunity in the region 21% said business opportunities in
Central Africa 7% 27% 51% 15%
Africa are essential to strategic growth. An additional 60%
0 Very 20 Slightly
40 Slightly
60 80 Very 100 said the international business community view business
positive positive negative negative
opportunities in the continent as important but risky.
These numbers reflect the successes that countries such
as Rwanda, Kenya, Mauritius, South Africa, and Morocco Business Opportunities in Africa in 2017
have had in marketing themselves to international investors. Q. Generally speaking, how do you think the international
For example, two-thirds of respondents said Rwanda was business community views business opportunities in Africa?
particularly good at marketing itself and providing relevant (Please select one response)
information to investors. Some 64% made a similar judgement
about Kenya a jump of 21 percentage points over 2016. Important but risky 60%

Mauritius and South Africa scored about the same as last year,
Essential to strategic growth 21%
at 50% each, while Morocco more than doubled its polling, at
41%. Keeping a close eye on
16%
developments, but not for now

Top 10 African countries that successfully market Not on the radar 3%

themselves
10 20 30 40 50 60 70 80 90 100
0
Q. What of the following countries do you consider are Business leaders need to be able to work with African and
particularly good at marketing themselves and providing relevant
international political leaders to help the continent continue
information to investors? (Please select all that apply)
to blossom, says Joel Kibazo. There is so much incredible
57% potential in Africa at the moment, and we are beginning to see
Rwanda
66%
this kind of collaboration between business and government
43%
Kenya bear fruit in key markets.
64%

Mauritius
51% Respondents to the survey indicated that one area for potential
50%
improvement is collaboration between business leaders and
51%
South Africa
50% governmental bodies. A very high 94% of the informed opinion
19% leaders on Africa who responded to this survey agreed that the
Ghana
42% private sector should be more involved in designing programs
20%
Morocco intended to increase intra-regional trade. As well, 96% said
41%
business leaders should be personally more involved in public
Ethiopia 29%
36% discussions on issues that relate to investing in Africa. This is
Botswana 22% because the respondents 82% -- viewed African business
36%
leaders as particularly effective at encouraging the right sort
Ivory Coast 20% 2016
25%
of investment into Africa, to boost the economy and benefit to
14% 2017
society. International business leaders ranked second with 56%
Nigeria
22% and international investors, third with 53%.
0 10 20 30 40 50 60 70 80

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Encouraging Investment into Africa in 2017 could significantly impact the performance of capital markets in
Q. To the best of your knowledge, which of the following groups
Africa. Some 83% cited political instability as potentially having
are particularly effective at encouraging the right sort of a significant impact on the capital markets, while 63% cited
investment into Africa to help boost the economy and benefit to poor financial structures.
society?(Please select all that apply)
Improving the performance of capital markets in Africa
African businesses leaders 82%
Q. Which of the following do you think could significantly impact
International businesses leaders 56%
the performance of capital markets in Africa? (Please select all
International investors 53% that apply)

International media 43%

Poor regulation 87%
Media in Africa 39%
Political instability 83%
International trade organisations 28%
Poor financial structures 63%
Pan-African organisations 26%
Lack of independence of the judiciary 58%
NGOs 23%
Systemic risks 54%
African politicians 21%
Lack of democratic accountability 48%
Local African community leaders 18%
Costs 40%
International law and regulations 11%
Environmental factors 33%
International politicians 6%
Performance of domestic companies 31%
Other 8%
Other 4%

PPPs on the0 menu

10 20 30 40 50 60 70 80 90 100 10 20 30 40

However, there is also cause0 for optimism. Since 2012, there

50 60 70 80 90 100

One area of potential collaboration between the public have been 450 African equity capital market transactions,
and private sectors is Public-Private Partnerships. These raising a total of $44.9bn, up 8% in terms of capital raised
agreements between governments and private sector over the previous five-year period. Last year was a difficult
organizations have helped finance power, transport, once for African capital markets due to global factors such as
sanitization and water projects across Africa. In the survey, 81% the US elections and Brexit, says Joel Kibazo. But we expect
are expecting an increase in these over the next 12 months up the growth and deepening of the capital markets in Africa to
from 67% last year. Nearly nine out of 10 respondents said they continue over the next five years as governments implement
believed the availability of more public-private partnerships further reforms.
would encourage investment into Africa. As well, 68% indicated
Indeed, seven out of ten respondents said they believed there
that these were particularly important for the leaders of African
would be more newly issued shares for expanding business
countries to concentrate on.
operations over the next 12 months, up 20 percentage points
Regulatory consistency across the African continent was from last year. Corporate finance will also increase, with 61%
also a significant request of respondents, with 70% saying predicting more M&A over the coming year, up from 55% in
they believed that this was important for African leaders 2016.
to concentrate on. Some 73% said the lack of regulatory
consistency is one of the main barriers to intra-African trade.
This area is a particular problem, with 94% agreeing that
Infrastructure funding needed
Improving the infrastructure was also a crucial theme, with 86%
local laws and regulations on investors, businesses, and their
of respondents saying this was particularly important for African
operations are a source of tension.
leaders to focus on. There is already considerable optimism in
Regulatory reform is a key area where Africas political this area, with 87% of those who responded to the survey saying
leadership can make a real difference, says Joel Kibazo. they believed there would be an increase in investment in next
Having the right regulations in place can stimulate the domestic generation communications infrastructure, including fiber and
economy and drive real GDP growth through both intra-regional broadband. Some 82% believe investment in more traditional
and foreign direct investment. Good regulations can also help infrastructure will increase as well.
domestic enterprises get off the ground.
Closer collaboration between business and government
leaders to help achieve regulatory reform, capital markets
Capital market optimism reform, and infrastructure investment are all key elements that
Poor regulation is also hampering the development of the capital Africa needs to rise to the next level, says Joel Kibazo. Some
markets in many countries 87% of respondents said this countries are already blazing the trail.

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INVESTMENT OUTLOOK POSITIVE AS AFRICA ENGAGES WITH REFORMS

RESEARCH METHODOLOGY
This research was conducted online by the Strategy Consulting & Research team at FTI Consulting from April 7th 13th 2017,
involving n=93 prominent opinion leaders on Africa. For more information on the research methodology, please e-mail market.
[email protected] .

Please note that the standard convention for rounding has been applied and consequently some totals do not add up to 100%.

Joel Kibazo Max Gebhardt Dan Healy James Doherty

Managing Director Managing Director Managing Director Managing Director
Strategic Communications Strategic Communications Strategy Consulting & Research Strategic Communications
+44 (0)20 3319 5622 +27 (0)11 214 2402 +44 (0)20 3727 1239 +44 (0)20 3727 1624
[email protected] [email protected] [email protected] [email protected]

About FTI Consulting

FTI Consulting is an independent global business advisory firm dedicated to helping organisations manage change,
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to anticipate, illuminate and overcome complex business challenges and opportunities.

The views expressed in this article are those of the author(s) and not necessarily the views of FTI Consulting,
its management, its subsidiaries, its affiliates, or its other professionals.

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04/17 - 000130.