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Africa ' s financial services sector continues downward trend
Total investment , jobs and capex all on the slide , although Kenya and Ghana are improving
Africa
Figures from greenfield investment monitor fDi Markets show that between January 2011 and May 2016 total investment in the financial services sector into Africa has continued to decline . The number of financial services projects into the continent has decreased significantly from 186 in 2011 to 150 in 2013 , and 88 in 2015 , the lowest figure recorded since 2007 .
The number of jobs and capital expenditure also dropped between 2011 and May 2016 . Data shows that 4216 new jobs were created in 2011 , with capital expenditure of $ 2.19bn , which declined to 3964 new jobs and $ 1.83bn in capital expenditure by 2013 . In 2015 job creation in Africa had fallen to 3074 with a capital expenditure of $ 1.40bn , marking decreases of 22.66 % and 9.95 % respectively from the previous year .
Between 2011 and 2016 South Africa attracted the highest number of investments in the continent with 68 FDI projects , followed by Kenya with 67 and Ghana with 62 . During this period South Africa also experienced a decline in financial services sector investments in line with the rest of continent , while both Kenya and Ghana reported increases in FDI inflows . The primary investing countries in Africa between 2011 and 2016 were the UK , the United Arab Emirates and Kenya with a total of 82 investing companies and a combined capex of $ 2.98bn . The downward trend recorded by fDi markets indicates that the slump Africa is experiencing in financial services investments is set to continue during 2016 . Data recorded for quarter one of 2016 shows that Africa only attracted 22 investments , a decrease of 8.33 % from the same period in 2015 and the lowest number of investments for a first quarter in nine years . Figures released for April and May further support this analysis , with only 11 projects recorded and continued decline in both job creation and capital expenditure . fDi Markets
BRICS - Africa trade down
Opportunities remain in agriculture and manufacturing
Trade between BRICS countries and Africa has decreased 21 % year on year in 2015 , according to a report by Standard Bank . However , Standard Bank senior political economist and chief report author Simon Freemantle puts much of this down to decreasing commodity prices . “ Sixty percent of the drop was accounted for purely by the reduction in oil price and the remainder of the drop had a lot to do with other base metals ,” he says . “ If you look at BRICS exports to Africa , they decreased by a very small margin and in fact Chinese exports to Africa grew year on year .” Mr Freemantle expects trade value to increase only once commodity prices go up again . He also sees plenty of opportunity for investment and co-operation between Africa and the BRICS countries , although most of this opportunity will be coming from India , China and South Africa rather than Brazil and Russia .
In addition , he does not expect this boom in co-operation to reach the levels of the few years following the global financial crisis , saying that trade will be “ nowhere near the levels that we saw in the 2008 to 2013 period and I don ’ t think there is anyone expecting that it will go back to those levels . The heady days of 20 % year-on-year BRICS-African trade growth are gone and we ’ re not going to see those again ”.
Alternative routes
Despite the years of extensive trade growth being over , there are still opportunities for investment and co-operation in agriculture , manufacturing , infrastructure and the continued trade of commodities . Mr Freemantle predicts this will largely be fuelled by India , China and South Africa as well as some other emerging markets , such as Turkey .
Mr Freemantle also believes investment could replace exports in increasing economic co-operation between Africa and BRICS . “ There might be some domestication of the products and services that they ’ ve typically exported to Africa , as we ’ ve seen with India and South Africa and in places like Kenya and Tanzania ,” he says . “ I think that model will start to be replicated in other geographies . I think that ’ s the sort of future of not quite BRICS-Africa but India , China and South Africa ’ s engagements with the continent .” – fDi Markets
8 Business Times Africa 2016