Nigeria, Egypt and South Africa dominate 80 percent of Africa’s portfolio investment market in the last decade and also account for about a 3rd of the incubators and accelerators.
The three nations ranked top three countries on the continent in terms of attracting federal direct investment (FDI) over the past decade.
Egypt attracted FDI of about $56.2 billion, Nigeria followed with about $45.1 billion and then South Africa with about $41.3 billion between 2011-2020.
The latest survey by the African Development Bank (AfDB) titled, ‘Entrepreneurship and Free Trade Volume II – Towards a New Narrative of Building Resilience’, was sequel to a report released earlier on ‘Entrepreneurship and Free Trade: Africa’s Catalysts for a New Era of Economic Prosperity’, examined the state of African entrepreneurship within a global lens, while highlighting developments, and suggesting future directions for entrepreneurship in Africa.
While looking at the various degrees of entrepreneurship across Africa, the survey found that Nigeria and three other nations dominate the market in terms of incubators and accelerators as well as investment percentages.
The report reads, “All regions and populations have differing degrees of entrepreneurship, and this is true in Africa as elsewhere. For instance, Egypt, Kenya, Nigeria and South Africa account for about a third of the incubators and accelerators and 80 per cent of investment on the continent.”
“Although this is not the only measure of entrepreneurship, there are reasons to explain why some countries push ahead faster with startups, ecosystem development, and commercialisation. In the cases of these four countries, their economies and populations are larger than most African countries”.
“The four countries that show the greatest investment in startups generally have higher FDI and are among the few countries able to access the limited portfolio investment that is made in Africa.
“In fact, Egypt, Nigeria and South Africa ranked as the top three countries on the continent in terms of attracting FDI over the past decade. They also tend to dominate the African portfolio investment market.”
FDI is an investment or a purchase of an interest in a company by a company or an investor located outside its borders. It is thus distinguished from a foreign portfolio investment by a notion of direct control.
It’s a business decision to acquire a substantial stake in a foreign business or to buy it outright in order to expand its operations to a new region.