Bumper year for Kenya-destined FDI

Kenya_flag_mapfDi Markets that even without the data for December, it is already clear that Kenya enjoyed a major increase in inward investment in 2015 when compared with 2014.

Greenfield investment monitor fDi Markets has tracked a bumper year for Kenya-destined FDI. Excluding retail, the monitor has recorded 78 projects between January and November 2015, a 36.84% increase compared with the whole of 2014. FDI entering Kenya during the 11 months of 2015 (for which data is available) has already surpassed that recorded for 2013, the previous multi-year high. fDi Markets is set to record 2015 as witnessing the highest number of inward FDI projects for Kenya since the it commenced tracking data in 2003.

fDi Markets has tracked the upward trend as beginning in 2007, with FDI levels increasing year on year between then and 2011. In the period between 2011 and 2014 a period of consolidation occurred in which inward investment fluctuated, with decreases recorded in 2012 and 2014. Between 2007 and 2015, fDi Markets has tracked a 766.66% increase in project numbers and a total capital investment of $14.04bn.

Kenya’s FDI resurgence in 2015 is further illustrated when compared with the rest of Africa. During 2015, Kenya attracted 12.58% of all FDI entering Africa, with only South Africa, a long-time powerhouse, attracting more, with 17.1%. This is further compounded by Nairobi attracting the most FDI on the continent at city level in 2015, beating Johannesburg, which has held this accolade since 2010.

With December’s data still to be recorded, Kenya is set to surpass previous years as a favoured destination for investment in Africa. With the implementation of proactive FDI legislation scheduled to be ratified during 2016 by Kenya’s government, further consolidation in 2016 is unlikely. Source: fDiMarkets

Rwanda banks on special economic zones to attract investors

Rwanda - WikipediaRwanda is wooing investors to invest in the country through building special economic zones. The Rwanda Special Economic Zones (SEZs) is a programme within the Rwanda Development Board that is designed to address domestic private sector constraints such as availability of industrial and commercial land, availability and the cost of energy, limited transport linkages, and market access among others.

Francois Kanimba, Rwandan minister of trade and industry told Xinhua on Sunday that the country was ripe for investments especially in manufacturing, service industry, tourism and hospitality, skills development among others.

“We are planning to construct SEZs economic zones across the country where investors will have the opportunity to explore the untapped potentials in Rwanda,” he said.

Kanimba said that Rwanda’s business environment is secure and the cost of doing business is friendly and the World Bank’s doing business reports have for several occasions ranked Rwanda among fastest growing economies in world that have eased the cost of doing business.

The small East African nation has so far constructed Kigali Special Economic Zone (KSEZ) located in Gasabo District within the country’s capital Kigali with phase one and two occupying 98 and 178 hectares of land respectively.

The government is now planning for phase three, which is expected to occupy 134 hectares. Phases one and two of the zone cover a surface area of 277 hectares while the third phase will cover approximately 134 hectares.

The trade zone is well equipped with tarmac roads, water and electricity rollout in all designated plots and a waste water treatment plant.

Kanimba continued that the commercial zones are designed to provide investors with industrial and commercial land, improve availability of electricity and transport linkages.

Official data show last year Rwanda attracted 500 million U.S dollars worth of investments and the government is targeting to double the investments in 2015.

According to 2014 World Bank’s Doing Business ranking, Rwanda was ranked 46 out of 189 economies surveyed globally registering improvements in the ease of obtaining construction permits, getting electricity and getting credit. Source: http://www.xinhuanet.com

Namibia Launches Trade Portal

Namibian Trade PortalThe Namibia’s Ministry of Finance and Namibia’s Customs & Excise, in partnership with the U.S. government has recently launched a powerful new tool to increase and facilitate cross-border trade. The “Namibia Trade Information Portal” is a web-based platform that provides an authoritative “one-stop shop” of readily accessible trade, customs and compliance information. It is designed to significantly reduce the time and effort required for local and international traders to access current information and documentation required for doing business. The portal is the culmination of many years of collaboration between government of Namibia agencies and ministries and the U.S. government, working through the U.S. Agency for International Development (USAID) Southern Africa Trade Hub Project.

In his keynote address, Minister of Finance Calle Schlettwein said that the Trade Portal reflects the commitment of the Namibian government to build a “robust, knowledge-based society” through various modernization projects. However, he cautioned that the portal must be kept up-to-date if it is to be sustainable and relevant.

“For this reason, I strongly appeal to my fellow and counterpart ministers to designate focal points in their ministries who shall administer and avail timely updates, preferably online transmission of such information to our designated team in the Ministry of Finance who will, in turn, keep the portal updated,” Schlettwein said.

According to Namibia Trade Information Portal’s project manager, Melannie Tjijenda, the portal will save people time when they enquire about trade-related matters, so they will no longer be sent ‘from office to office.’

“International traders will now know how they can invest in Namibia,” she said, adding that this will save money on expenses like phone calls.

Tjijenda said the fact that most government websites are not regularly updated will not be the case with this portal. “When something changes, we will update it” she said, further pointing out that they have a team of content managers who will be checking and updating the content on regular basis. Source: The Namibian/USAID

Mozambique – conditions ideal for ‘Chinese model’ of Special Economic Zones

Maputo1Mozambique has the necessary conditions to successfully adopt the Chinese model of Special Economic Zones, which helped to boost the Chinese economy, according to researchers Fernanda Ilhéu and Hao Zhang.

In the study “The Role of Special Economic Zones in Developing African Countries and Chinese Foreign Direct Investment (refer to link below),” researchers from the Lisbon School of Economics and Management noted that over 35 years, the Special Economic Zones have had “a decisive role in the development of places like Shenzhen, Zhuhai, Xiamen, Shantou, Hainan and Shanghai, and that African countries can leverage this experience.

In 2006, the Forum on China-Africa Cooperation gave “significant priority” to creating up to 50 SEZs abroad, which are being implemented, with US$700 million invested by Chinese companies in 16 EEZ, according to information from China’s Trade Ministry.

Increasingly focused on business abroad, China needs raw materials and African markets to which to export its products, but can also benefit from shifting some of its industries to Africa, as the cost of Chinese labour increases.

The approach to Africa has involved through loans and financing for the construction of infrastructure, and “the development of African countries requires China’s increasing involvement,” including “collaborating in the development of SEZs,” the authors argue.

Regarding Portuguese-speaking countries, the average annual growth of trade between 2002 and 2012 totals 37 percent, turning China into the largest trading partner and largest export market for those countries.

The relationship has proved to be “dynamic in both directions,” they added, with hundreds of companies from Portuguese-speaking countries operating in China and Chinese investment in those countries of around US$30 billion, according to China’s Trade Ministry.

As for the SEZ, the two researchers focused their attention on the Mozambican Manga-Mungassa (Beira, Sofala province) SEZ, established in May 2012, under the management of China’s Dingsheng International Investment Company (Sogecoa Group), which has plans to invest close to US$500 million.

Nearing completion, the first phase includes the construction of warehouse units, followed by the “operational” phase, with construction of additional infrastructure such as hotels and housing, and finally the free industrial zone, where high tech units will be installed.

“In terms of knowledge transfer, Mozambique has made active steps in learning from the experience of Chinese SEZs and using this model to attract foreign investment,” they said.

In 2012 the Mozambican government created the Office for Economic Areas with Accelerated Development (Gazeda) that in addition to Manga-Mungassa, is responsible for the projects of the Belulane Industrial Park, the Locone and Minheuene Free Industrial Zones and the Crusse and Jamali integrated park.

On 6 May, 2014 the Mozambican government approved the establishment of the Mocuba SEZ, a sign of the “determination to create more conditions and to look for more opportunities and economic measures to create jobs and generate wealth,” in the country, the study said.

According to the authors, Mozambique has a strategic location, the ability to attract investment through the diaspora, as well as its model of economic growth and development in its favour, although there remain difficulties in infrastructure and technological development.

“The Chinese SEZ model can be successfully applied to the Manga-Mungassa area,” they concluded. Source: macauhub / MZ

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FDI – Where is China Investing?

China-Overseas-FDIFollowing the financial crisis that hit Asia in the late 1990s, the Chinese government introduced its ‘Going Out’ or ‘Going Global’ strategy. The country had been open to inward FDI for a number of years at this stage, and the time had come to promote Chinese companies globally.

While Africa considers itself as a significant destination for China FDI, the numbers indicate that Chinese projects and investment is significantly smaller than it’s investments in other parts of the western world. To see exactly where the money is going, visit this link – Where is China Investing?

The government aimed to increase investment, promote its Chinese brand of companies and improve the country’s free market. The policy became one of the government’s ‘four modernisations’ and encompassed a range of schemes to assist outward FDI, such as using currency reserves to support foreign investment, offering tax rebates to investors and encouraging Chinese embassies globally to offer more and better financial assistance.

The result has been a boom in Chinese outward FDI. Between January 2009 and December 2013, greenfield investment monitor fDi Markets recorded a total of $161.03bn in Chinese outward FDI, creating almost 300,000 jobs across the world. During this period, in terms of investment projects, China was the ninth largest source country for FDI, peaking in 2011 with 429 projects. In terms of both capital expenditure and job creation, China was ranked seventh globally. Source: FDI Magazine

Poland SEZs – Case Study 20 years after

CASE Study - SEZs in PolandIn “Special Economic Zones – 20 years later” Camilla Jensen and Marcin Winiarczyk offer a panel data evaluation of the effectiveness of Poland’s regional policy since 1994. The policy was originally initiated to foster new economic activity in designated greenfield zones in high unemployment areas at the beginning of Poland’s transition. Over time the policy has evolved and many areas including areas that encompass economic activities from the socialist period have been adopted into the scheme.

The main incentive tool for new investors to locate in the SEZs are income tax reductions. In exchange Poland is expected to get new, environmentally friendly and export oriented investments that offer additional job placements. The econometric evaluation shows that the policy has been successful mainly on one criteria which is to attract foreign direct investment into the Polish SEZs. More qualitative and long-term development oriented targets such as instilling environmental friendly behaviour are lagging behind.

Comparing the wage developments in and out of the zones also suggests that industries and activities located in the zones are less skill intensive and therefore also less prone to catapult Poland into its next developmental phase, which is a skill-intensive innovation driven economy. Therefore, the authors conclude that to instil among investors in SEZs better behavioural models that will lock investors into a future oriented development path, it is necessary to consider other incentives and initiatives. Read the full report at this link! Source: CASE Research

African Countries of the Future 2013/14

fDI 2013-14 Rankings for Africa

fDI 2013-14 Rankings for Africa

South Africa has been crowned as the African Country of the Future for 2013/14 by fDi Magazine, One of the economic powerhouses of the African continent, South Africa has been named fDi Magazine’s African Country of the Future 2013/14, with Morocco in second position and Mauritius in third. New entries into the top 10 include Nigeria and Botswana. Click here to access the full report!

South Africa has consistently outperformed its African neighbours in FDI attraction since fDi Markets records began in 2003. Figures for 2012 build upon South Africa’s historical prominence as an FDI destination with the country attracting about one-fifth of all investments into the continent – more than double its closest African rival, Morocco. In 2012, FDI into South Africa amounted to $4.6bn-worth of capital investment and the creation of almost 14,000 jobs.

South Africa claimed the title of fDi’s African Country of the Future 2013/14 by performing well across most categories, obtaining a top three position for Economic Potential, Infrastructure and Business Friendliness. Its attractiveness to investors is evident in its recent FDI performance, where the country defied the global trend with 2011 and 2012 figures surpassing its pre-crisis 2008 statistics. Despite a slight decline of 3.9% in 2012, South Africa increased its market share of global FDI, which further increased in the first five months of 2013 as the country attracted 1.37% of global greenfield investment projects. According to fDi Markets, South Africa now ranks as the 16th top FDI destination country in the world.

South Africa’s largest city, Johannesburg, was the top destination for FDI into Africa and is one of only five African cities that attracted more investments in the first five months of 2013 compared to the same period of 2012. South Africa ranked third behind the US and the UK as a top source market for the African continent in 2012, accounting for 9.2% of FDI projects.

In 2010, South Africa became the ‘S’ of the BRICS – five major emerging national economies made up by Brazil, Russia, India and China. While FDI into South Africa fell 3.9% in 2012, this was the lowest recorded decline of the BRICS grouping which, on average, experienced a 20.7% decline in FDI. In its submission for fDi’s African Countries of the Future 2013/14, Trade and Investment South Africa (TISA) stresses the importance of the country’s attachments to its BRICS partners. Source: fDI Magazine

FDI – Nigeria First in Africa for a Second Year

TCredit - Photobuckethe United Nations Conference on Trade and Development (UNTAD) yesterday ranked Nigeria Africa’s number one destination for Foreign Direct Investment (FDI) in Africa for the second time in two years. The latest UNCTAD report, entitled, “Global Value Chains: Investment and Trade for Development”, put Nigeria’s FDI inflows at $7.03billion while South Africa recorded $4.572bn; Ghana, $3.295bn; Egypt, $2.798bn and Angola, 6.898bn; among others.

According to the report, FDI inflows to African countries went up by five per cent to $50bn in 2012, though global FDI declined by 18 per cent. The report noted that most of the FDIs into Africa mainly driven by the extractive industry, but said there was an increase in investments in consumer-oriented manufacturing and services.

Global FDI fell by 18 per cent to $1.35 trillion in 2012. This sharp decline was in stark contrast to other key economic indicators such as GDP, international trade and employment, which all registered positive growth at the global level,” which was attributed to economic fragility and policy uncertainty in a number of major economies, giving rise to caution among investors.

It added that developing countries take the lead in 2012 for the first time ever, accounting for 52 per cent of global FDI flows. This is partly because the biggest fall in FDI inflows occurred in developed countries, which now account for only 42 per cent of global flows. In 2011, Nigeria was ranked Africa’s biggest destination for FDI, with total inflows of $8.92bn, South Africa followed with $5.81bn, while Ghana received $3.22bn. Source: AllAfrica.com

 

Best SA Exporters

best_sa_logoBest SA Exporters is an online based business, created in order to promote export-ready Southern African goods and services to the international marketplace. In essence, Best SA Exporters role is to assist in growing your international trade, resulting in foreign direct investment and national job creation. Clients are advertised and promoted through a highly visible Best SA Exporters website, as well as through popular social networking presence on Facebook, Twitter and LinkedIn. Adding on to these services, Best SA Exporters now offers an international trade related company the opportunity to promote its goods / services to the Best SA Exporters database of approximately 8000 online subscribers. Trade leads received for each campaign will then be collated and supplied exclusively to you as an advertiser. Something worthwhile for exporters to look into?

IDZs to be replaced with SEZs

Department of Trade and Industry (South Africa)Heard this before? In line with the Industrial Policy Action Plan and the New Growth Path, the Department of Trade and Industry (the dti) aims to continue fostering its efforts to create employment and economic growth by establishing a strong industrial base in South Africa. The new initiative aims to improve on the concept of industrial development zones (IDZs) which have enjoyed mixed success since being introduced in December 2000 through the Manufacturing Development Act. 

An IDZ is a purpose-built industrial estate linked to an international airport or seaport which is tailored for the manufacturing and storage of goods. It offers investors certain rights within the zone, in addition to incentives such as customs duty and VAT relief. One important priority of the IDZs is to boost job creation and skills in underdeveloped regions. The IDZ programme led to the establishment of five zones – Mafikeng, OR Tambo International Airport, Richards Bay, East London and Coega. The Richard’s Bay IDZ only commenced its first phase of development in September last year while OR Tambo International Airport is not yet fully operational.  The Industrial Policy Action Plan, issued by the Department of Trade and Industry in February 2011, has also identified, as a key milestone, the establishment of an additional IDZ at Saldanha Bay. 

The Special Economic Zones (SEZs) programme is one of the most critical instruments that can be used to advance government’s strategic objectives of industrialisation, regional development and job creation. Moreover, the programme can assist in improving the attractiveness of South Africa as a destination for foreign direct investment.

In order to ensure that the SEZ programme is an effective instrument for industrial development, the dti has developed the SEZ Policy and Bill. Through the Bill there will be a dedicated legislative framework for special economic zones.

The main objectives of the SEZ Bill are to provide for the designation, development, promotion, operation and management of Special Economic Zones; to provide for the establishment of the Special Economic Zones Board; to regulate the application and issuing of Special Economic Zones operator permits; to provide for the establishment of the Special Economic Zones Fund; and to provide for matters incidental thereto.

Furthermore, the SEZ Bill will enable government to move towards a broader Special Economic Zones Programme, through which a variety of special economic zones can be designated in order to address the economic development challenges of each region and address spatial development inequalities.

Although national laws may be suspended inside industrial zones, government is currently not offering regulatory incentives to derogate from labour rules, a concession which is seen by some as crucial to stimulate investment in special zones. It is however unlikely that a relaxation of labour laws will be considered under the SEZ initiative. Benefits are rather expected to come in the form of enhanced incentives for labour intensive projects and additional tax relief for investors. A further question arises – just how flexible an inventive will the customs and VAT requirements be allowed to be?

The key provisions include the establishment of a Special Economic Zones Board to advise the Minister of Trade and Industry on the policy, strategy and other related matters; establishment of the Special Economic Zones Fund to provide for a more coherent and predictable funding framework that enables long-term planning; strengthening of governance arrangements including clarification of roles and responsibilities of key stakeholders. Source: Department of Trade and Industry.