Analysts are worried over the drop in capital investment in Sub-Saharan Africa.
The region has been predicted in the past to lead the growth chart in the world as the general conditions of its inhabitants improve but a decline in growth for the last decade has left economist worried.
Some West African economic power homes such as Ghana and Nigeria have experienced a relatively slower growth in recent times. Every few years, almost like clockwork, optimistic articles predict that sub-Saharan Africa’s moment is just around the corner.
The 48 countries in the region are home to 937 million people and have a combined GDP of some $1.7 trillion, not to mention rich troves of natural resources and innovative startups such as M-Pesa.
For the region to reach its potential, foreign investment is critical, but capital inflows have been slowing in recent years, falling from a peak of $106 billion in 2011 to $63 billion in 2014.
Credit Suisse analysts in Johannesburg say foreign direct investment appears to have fallen even further in 2015, but they expect the downward trend to begin to reverse itself soon.
Several economic factors and governance measures that tend to encourage investment, including higher labor force participation and regulatory quality, have been improving over the past decade.
Over the next five years, the bank expects economic growth in the region to increase faster than global growth, unleashing a virtuous cycle of higher investment.
Credit Suisse believes that total investment inflows over the five-year period between 2016 and 2020 will increase 17 percent from the period between 2011 and 2015.
Source: Investment Credit Suize