While foreign direct investment (FDI) into Africa had been on the increase over the past decade, the continent was still not getting its fair share of global investment compared with other emerging markets, said Ernst & Young (E&Y) Africa CEO Ajen Sita in Johannesburg.

In 2008, foreign investment into African reached a peak at just over $200-billion, tapering off in line with the global economic recession to the estimated $70-billion investment forecasted for 2011, E&Y’s first ‘Africa Attractiveness’ survey, released on Tuesday, showed.

While South Africa was seen by 59% of respondents as being the most attractive investment destination between 2003 and 2010, it was only able to attract 15% of new FDI projects.

The report further showed that capital investment would once again climb to $150-billion in the next four years, but Sita warned that this would not be enough to cover the continent’s investment needs.

President Jacob Zuma said last month Africa would need $480-billion just for infrastructure development over the next ten years.

“The continent needs to better articulate the abundant business opportunities that it has to offer to best position itself to other emerging markets,” said E&Y director Michael Lalor.

Currently, Africa attracts 4,5% of global FDI.

However, the survey showed that compared with the big emerging economies including Brazil, Russia, India and China, also referred to as the Bric economies, Africa surpassed Brazil and Russia in 2007, in the number of new FDI projects being embarked on, but still had a lot of catching up to do with China and India.

Sita said that Africa’s investment proposition was extremely complex, owing to the differences in business culture, regulatory environments, languages and even time zones existing across the 53 countries on the continent.

Respondents to the E&Y survey listed unstable political environments as the number one barrier to investment in Africa, followed by corruption and weak security.

Sita pointed out that issues such as lack of infrastructure, skilled labour and energy security, often thought of as being significant barriers to investment, were in reality not perceived as such, but already factored into possible investment opportunities.

He added that the unrest that had been prevailing in Northern Africa, often also impacted negatively on investor sentiment when considering sub-Saharan Africa as an investment destination, when in fact, the region had experienced great political stability in recent years.

To strengthen the continent’s case, Sita believed that it needed to ‘bulk up’. “We need to create bigger markets. Even though we are seeing economic blocks being formed, these are still not large enough, we need Africa to consolidate, we need an Africa-bloc.”

He added that as a consolidated unit, the continent would be able to compete against the major emerging markets.

Meanwhile, Lalor pointed out that investment from other emerging markets into the African economy was on the increase, and would surpass investment from developed countries by 2023.

However, he noted that emerging markets generally tended to invest in the extractive sectors, aimed at fuelling their own growth, while developed economies and even other African economies were increasingly investing in tertiary markets. “While capital investment is not always as high when investing in tertiary or services sectors, such type of investments support more sustainable and diversified growth.”

By 2015, Africa would boast seven out of the top ten fastest growing economies and by 2030 it would host 50% of the world’s working-age population.

“The cup runneth over. Africa is open for business and now needs to better articulate its investment case to ensure that it attracts the required FDI to ensure sustainable growth,” concluded Sita.