Nigeria emerged as the top investment destinations for Asian sponsor over the last ten years, attracting investment worth of $22.8 billion within the period; this is according to a new research by Linklaters LLP, a global law firm.
“For the majority of the continent, there is a strong macroeconomic growth outlook, improving business environment, abundant natural resources, and infrastructure development opportunities so we expect countries such as Nigeria, Mozambique and Kenya to continue to be attractive investment destinations,” Andrew Jones, head of Linklaters’ Africa group.
According to the latest National Bureau of Statistics (NBS) quarter four capital importation report, Asian countries imported a total of $585.48 million capital into the country out of a total of $4.50 billion capital imported in Q4.
“It’s no surprise to see Nigeria feature so prominently – the investment appetite is huge, with opportunities and a level of return on investment across the energy and infrastructure sectors to match,” John Maxwell, Managing Partner of Linklaters’, Japan office.
Projects currently in development in African countries with Asian backing include building a road for transporting agricultural products and natural resources between the port of Nacala and landlocked countries of Malawi and Zambia, construction of geothermal power plants in Ethiopia and the $4billion rehabilitation of the Mombasa to Nairobi railway line.
“The last 10 years, the level of project finance investments sponsored by Asian funds in Africa has increased by over 160 percent, the amount of fresh capital poured into the continents’ projects such as roads, water sanitation plants and oil and gas pipelines in the last year alone standing at $4.16 billion,” the research said.
Despite the election postponement causing jitters among investors, corporations and investors are still watching the country. Recent attacks by Boko Haram continue to have a negative impact on perceptions of Nigeria.
Nigeria’s total capital imported to the country for the period declined. A sharp decline of $2,042.84 million or 31.22 percent was recorded from the value of $6,542.58 million that was recorded in the preceding quarter.
The bureau attributed the decline in the capital imported in quarter four to low levels of investors’ confidence owing to the build-up to the 2015 elections.
Among the Asian sponsor, China remains the most active player in Africa having completed 24 deals worth a combined $14.33billion over the last decade. Indian investors followed completing deals valued at $6.15billion, with Indonesia coming in third with $1.76billion.
Over the last decade, Asian buyers have been behind 450 M&A and project finance African deals totalling more than $109billion combined.
Nigeria remained the clear leader out of the African countries with twice the number of companies in the index considering investing in the West African country.
“Nigeria maintained its top spot as the frontier-market economy that is attracting the most attention from American and European multinationals for potential future investments,” according to the Wall street journal (WSJ) frontiers and frontier strategy group (FSG) frontier market sentiment index, released in January.
Other top African countries with high Asian investment are; South Africa at $6.8 billion, Mozambique at $5.9 billion, Egypt at $5.48 billion and the DRC at $5.36 billion.
JOSEPHINE OKOJIE
