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Study shows increased appetite for investment in Africa

A new study amongst professional investors reveals that 45 percent view Africa as an attractive investment opportunity. This helps explain why 64 percent expect foreign direct investment into Africa to increase over the next five years.

The research was commissioned by UWIN (Unleashing the Wealth in Nations), a new blockchain business aiming to transform farming and commodity trading in Africa and other parts of the developing world.

The main reason why investors believe Africa will attract more foreign direct investment is because technological advances will help transform economies.

This is followed by 54 percent who said it is because the continent will become more appealing to investors because there will be greater stability in the region, followed by 44 percent who said it’s young and fast-growing workforce give it an advantage over many developed countries that have the opposite.

Lack of infrastructure is seen as biggest obstacle holding back Africa – highlighted by 82 percent of professional investors interviewed. This is followed by a lack of robust regulation (78 percent of investors) and political risk (80% of investors). However, there is a strong feeling amongst investors that many of these issues are beginning to be addressed.

Much of the investment into Africa is also expected to go on improving the infrastructure of the region – 80 percent of investors expect the use of Project Finance in Africa to increase over the next five years, and 88 per cent believe the amount spent on infrastructure overall will increase.

64 percent of professional investors expect foreign direct investment into Africa to increase over the next five years. 46 percent believe Africa will enjoy some of the strongest economic growth of anywhere in the world.

Biggest obstacles to Africa reaching its potential are a lack of infrastructure, corruption and poor regulation.

Sandra Ro, Managing Partner and COO of UWIN said: “Despite the positive attitude towards Africa from many investors, the continent has many issues to tackle.

In terms of the biggest ones holding them back, 82 percent of investors we interviewed cited a lack of infrastructure, and 82 percent highlighted corruption. This is followed by a lack of robust regulation (78 percent of investors) and political risk (80 percent of investors). However, there is a strong feeling amongst investors that many of these issues are beginning to be addressed.”

Julius Akinyemi, CEO of UWIN said: “Our research shows investors feel African governments are becoming more focused on addressing some of the challenges they face. Between now and 2023, 42 percent of investors expect levels of corruption in Africa to fall compared to only 24 percent who anticipate it will increase. Much of the investment into Africa is also expected to go on improving the infrastructure of the region – 80% of investors expect the use of Project Finance in Africa to increase over the next five years, and 88% believe the amount spent on infrastructure overall will increase.”

UWIN is currently in discussion with African governments on how they could use its new and unique technology proposition that for the first time will enable farmers in the developing world to properly register their commodities, mobilise them and efficiently trade their produce on a trusted platform.