In a report released by Financial times in 2016, Egypt remained the leading destination for foreign direct investment (FDI) into Africa in 2015 with $14.5bn of announced investments. This is against the background of a volatile exchange rate, reduced imports and exports, and a private sector that had been in recession for a year.
Nigeria placed second recording $8.6bn, Mozambique $5.1bn, South Africa $4.7bn, Morocco $4.5bn, Côte d’Ivoire $3.5bn, Angola $2.7bn, Kenya $2.4bn, Senegal 1.9bn, Cameroon 1.8bn, while the rest of the continent accounted for $16.7bn. The top 10 destination countries for FDI into Africa account for 77 percent of projects and 75 percent of capital investment of FDI in the region as a whole.
The 2016 World Investment Report attributed the high influx of FDIs into Egypt to the Egyptian government’s amendment of its Investment Law which they saw as a catalyst to increasing investment. The reform proposed “out-of-court forums to settle investor-state disputes and grant incentives for investment in specific sectors or regions”. Also, a Higher Council for Investment, in which a number of representatives will constantly improve the investment environment was formed. The government of Egypt made deliberate effort to increase its investment in mega projects to encourage increasing FDI inflows. The government had allowed the General Authority for Investments and Free Zones to be a one-stop-shop for investors, while other incentives included reduced energy prices; the possibility of partial reimbursement of costs of utilities, technical training, and social security charges; and free or reduced cost land. To qualify for these benefits, investment projects must meet specific regulations.
According to a release by the World Bank Group, the Egyptian government has set a goal of increasing its renewable energy share from approximately 9 percent in 2012 to 20 percent by 2020. Recent developments. An Italy-based oil and gas giant, Eni SpA, recently indicated its plans to invest between $6bn and $10bn in developing a newly discovered gas field, the Zohr field located off the Egyptian coast. The company is currently in talks to sell at least 20 percent of its stake.
The main growth drivers of FDIs in Egypt were chiefly the financial industry, pharmaceutical industry, telecommunications sector, automotive, and raw materials. Business Services, Sales, Marketing & Support and Manufacturing also topped the business activities for FDI projects into Africa in 2016.
Western Europe was by far the top source region for capital investment in Africa with $30.1bn representing 45 percent of market share in the year under review. The United States was the top source country for FDI projects into Africa, with investment of $6.8bn The UK was the second most prolific investor into Africa in 2015. Italy was the top investor by capital investment in the region in 2015, with projects valued at $7.4bn. Asian countries invested in 11 percent more African FDI projects in 2015. India and China accounted for a 5 percent market share of all inward FDI projects.