Windhoek, Walvis swim in foreign money
A new report on foreign direct investment also ranks Namibia among the top 20 African destinations for Chinese investment.
ELLANIE SMIT
A global report has ranked Windhoek and Walvis Bay among the cities in Africa attracting the highest foreign direct investment (FDI), with the capital ranked 40th in terms of attracting FDI in Africa.
Windhoek received US$958 million in foreign funds between 2013 and 2016, which is approximately N$14 billion at today’s exchange rate.
The State of African Cities report also placed Windhoek at 460th globally in terms of attracting FDI.
The rankings showed which African cities - out of 558 - received the most FDI in US dollars between 2003 and 2016, as well as their ranking among roughly 10 000 cities worldwide.
It ranked Namibia among the top 20 African destinations for Chinese FDI.
The report said from 2003 to 2014, Chinese FDI increased from 0.15% to 3.27%.
Algeria, Zambia and Kenya, at that stage, were the countries that received the lion’s share.
According to the report, Chinese capital prefers democratic countries since additional transaction costs may be demanded in countries with low levels of democracy, because of issues such as corruption.
“Chinese capital does not enter Africa to merely exploit its resources and then leave. Rather, most Chinese investments in Africa are long-term. As some have pointed out, China has a clear strategy for Africa, but Africa has no strategy for China,” the report states.
The report raises the issue of working conditions in Chinese-established factories in Africa, saying they are generally not satisfactory.
It also says Walvis was ranked 42nd among the African cities attracting FDI, with US$401 million.
There has been a 9.11% growth in FDI in Windhoek, while FDI in Walvis has seen a decline of 6.1% over the years.
In total, FDI in Africa amounted to US$582 789 during the period under review, with the top-ranked cities being Cairo, Johannesburg and Tangier.
Cairo received US$1.37 billion in FDI, while Johannesburg received US$1.32 billion and Tangier slightly more than US$1 billion.
“The global rankings reveal that Cairo (64th) and Johannesburg (69th) are doing quite well in the global investment arena. However, no African city is found within the top 10 FDI recipient cities of the world.”
According to the report most FDI in Africa has been in manufacturing.
This is the most anchored and stable FDI sector with substantial scale, albeit with moderate investment growth (5%). Resources FDI, although at a significant scale, has shown strong negative growth (-17%) over the period 2003-2016.
Going into the impact that FDI has on income inequality, it says at country level, Ethiopia has the fastest-growing economy in Africa, while also having the lowest level of income inequality (0.300), followed by Mali (0.307), Burundi (0.313), Egypt (0.314) and Namibia (0.333).
“Zimbabwe, one the most unequal countries in Africa, has shown the largest decline in income inequality, followed by Namibia.”
The report found that the impact of FDI on countries is determined by local conditions.
It says that FDI leads to an increase in income inequality in host countries, but when controlled by other local factors such as absorptive capacity, human capital, the level of technology and the quality of institutions, FDI reduces income inequality.
A global report has ranked Windhoek and Walvis Bay among the cities in Africa attracting the highest foreign direct investment (FDI), with the capital ranked 40th in terms of attracting FDI in Africa.
Windhoek received US$958 million in foreign funds between 2013 and 2016, which is approximately N$14 billion at today’s exchange rate.
The State of African Cities report also placed Windhoek at 460th globally in terms of attracting FDI.
The rankings showed which African cities - out of 558 - received the most FDI in US dollars between 2003 and 2016, as well as their ranking among roughly 10 000 cities worldwide.
It ranked Namibia among the top 20 African destinations for Chinese FDI.
The report said from 2003 to 2014, Chinese FDI increased from 0.15% to 3.27%.
Algeria, Zambia and Kenya, at that stage, were the countries that received the lion’s share.
According to the report, Chinese capital prefers democratic countries since additional transaction costs may be demanded in countries with low levels of democracy, because of issues such as corruption.
“Chinese capital does not enter Africa to merely exploit its resources and then leave. Rather, most Chinese investments in Africa are long-term. As some have pointed out, China has a clear strategy for Africa, but Africa has no strategy for China,” the report states.
The report raises the issue of working conditions in Chinese-established factories in Africa, saying they are generally not satisfactory.
It also says Walvis was ranked 42nd among the African cities attracting FDI, with US$401 million.
There has been a 9.11% growth in FDI in Windhoek, while FDI in Walvis has seen a decline of 6.1% over the years.
In total, FDI in Africa amounted to US$582 789 during the period under review, with the top-ranked cities being Cairo, Johannesburg and Tangier.
Cairo received US$1.37 billion in FDI, while Johannesburg received US$1.32 billion and Tangier slightly more than US$1 billion.
“The global rankings reveal that Cairo (64th) and Johannesburg (69th) are doing quite well in the global investment arena. However, no African city is found within the top 10 FDI recipient cities of the world.”
According to the report most FDI in Africa has been in manufacturing.
This is the most anchored and stable FDI sector with substantial scale, albeit with moderate investment growth (5%). Resources FDI, although at a significant scale, has shown strong negative growth (-17%) over the period 2003-2016.
Going into the impact that FDI has on income inequality, it says at country level, Ethiopia has the fastest-growing economy in Africa, while also having the lowest level of income inequality (0.300), followed by Mali (0.307), Burundi (0.313), Egypt (0.314) and Namibia (0.333).
“Zimbabwe, one the most unequal countries in Africa, has shown the largest decline in income inequality, followed by Namibia.”
The report found that the impact of FDI on countries is determined by local conditions.
It says that FDI leads to an increase in income inequality in host countries, but when controlled by other local factors such as absorptive capacity, human capital, the level of technology and the quality of institutions, FDI reduces income inequality.
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