Capital project advancements in the January-to-June period were attributed to transport and logistics as well as real estate, hospitality and construction. Overall foreign direct (FDI) capital investment amounted to $49 billion.
The firm said the weaker prospects for the region stemmed from sharp downward revisions in overall growth forecasts this year, mainly reflecting conditions in economies of Nigeria, South Africa and Angola.
EY’s Africa Business Centre leader, Michael Lalo, said Europe emerged as the largest regional investor in Africa, contributing 35.1 percent of FDI projects and 17.8 percent of capital investment” in the first half of 2016.
“Investor sentiment towards Africa as an attractive investment destination is likely to remain somewhat softer over the next few years. Companies already doing business in Africa will continue to invest, but will probably be more discerning,” said Lalor.
“Some will invest at a slower pace, looking to consolidate operations and drive profitability; while others are likely to double down on their investments, using this period of economic slowdown to further strengthen their positioning in key markets.”
EY said prospects for the next year-and-half period looked dim with a relative slowdown in investment over the next 18 months, as investors adjusted their strategies.
Zimbabwe chamber of mines’ chief executive, Isaac Kwesu, last month said there had been no new green-field investments into the country’s mining industry for this year.
Elize Kruger, an analyst at NKC African Economics said South Africa’s economy had been affected by “low-business and consumer confidence levels, dismal local demand, high unemployment, the severe drought, policy and political uncertainties” this year.
Growth in investment was also projected to be concentrated on regional countries that showed robust growth.
EY’s findings noted that outside of South Africa, Angola and Nigeria, there were a number of bright spots for investment in East, West and North Africa where growth rates had averaged 4 percent and above.
EY said there had been a significant rise in capital project investment, mostly in brown-field investments, which pushed up job creation prospects on the continent.
It said job creation resulting from FDIs had risen 12.6 percent compared with the same period last year.
“This translates into a strong uptick in jobs created per FDI project, from an average 165 in 1H15 to 214 jobs in 1H16,” the firm said, adding that Morocco, Algeria and Tunisia reported higher inward investment project numbers while Ivory Coast continued to see an uptick after investment increased by 28.6 percent.
The firm said this was in contrast to a slowdown in investment project numbers in most hub economies.