Africa’s investment landscape is shifting. African FDI flows between January and October 2011 reveal that the top 10 companies investing in the continent, which accounted for 11% of investment projects in Africa, were mainly from emerging economies.

Furthermore, the top two investors that accounted for the bulk of the investment projects were both African banks. Also, according to data from greenfield investment monitor fDiMarkets, the top three companies that generated the most investment projects in Africa were all banks, including the Togo-based Ecobank Group, Kenya’s Equity Bank and Germany’s Deutsche Post.


This markedly contrasts with the same period in 2010, where the top 10 investors, which accounted for 10% of all investment projects, were predominantly from developed Western economies. The top three companies then were Swiss food giant Nestlé, US technology company IBM and Indian business conglomerate Bharti Group.

In both periods, the leading sector was financial services, which accounted for 14% of projects in 2010, and 15% in 2011. The leading business activity was manufacturing, which accounted for 23% of investment projects in 2010 and 28% in 2011.

Domestically driven

These figures from fDiMarkets point to wider structural shifts in the reorientation of the investment landscape in Africa. “One of the things not brought up frequently enough is that the continent is starting to get full of African companies investing regionally, so you have African banks, manufacturing and services companies that are investing regionally, and becoming local multinationals,” says Christopher Hartland-Peel, managing director of the Hartland-Peel Africa Equity Research.

Indeed, Ecobank Group and Equity Bank appear to illustrate this phenomenon where emerging markets within Africa are increasingly driven by Africa-based companies. When examining the other top investors in Africa, among the top 10 investors are: India's telecommunications company Spanco, multinational conglomerate Mahindra Group and the State Bank of India; Nigeria-based manufacturing conglomerate Dangote Group; and Mauritian telecommunications company Seacom.

Their role reflects wider shifting global patterns tied to the ongoing effects of the 2008 financial crisis, as the African Economic Outlook maintained developed countries, which accounted for 72% of FDI flows to Africa between 2000 and 2008, scaled back on their investment activities after the crisis.

Nevertheless, developed economies remain embedded in Africa, as European-based companies Deutsche Post, Vodafone and Nestlé still featured among the top 10 investors in 2011.

Ecobank's lead role

Ecobank Group’s remarkable rise to become Africa’s largest lender by geographical spread is a consequence of calculated strategising. Between January and October 2011, financial services was the leading sector for all investment projects in Africa, accounting for 15% of investment projects, and Ecobank emerged as the leading investor in the continent, according to fDiMarkets.

Ecobank’s African expansion has been rapid, given that in the same period last year it did not even rank among the top 10 investing companies in Africa. “To an extent we are pioneers of African institutions investing in Africa,” says Arnold Ekpe, CEO of Ecobank Group, in an interview with fDi. “We do not have an Africa strategy – Africa is our strategy.”

Ecobank was early in joining the swelling list of African banks driving the dynamic economic development of the continent. Yet it makes no secret of its ambitions. Self-styled as 'the fastest growing pan-African bank', Ecobank built scale through organic growth and acquisitions, purchasing a majority stake in local banks and expanding into new markets. “Ecobank was established as a regional bank for African countries from inception. We have moved from west Africa and we now operate in 32 [African] countries, driven by our mission of building a world-class pan-African bank,” he says.

Improved image

As Africa’s economic pulse quickens, the continent is vibrant with commercial opportunities in the banking sector. McKinsey Global Institute reported that between 2002 and 2008, finance was the second fastest growing sector in the continent, expanding at a compound annual growth rate of 8%, accounting for 6% of Africa’s GDP. All these facts, according to Mr Ekpe, have been influential in improving the perception of Africa as an attractive investment destination among investors.

“Banking is a marathon, not a sprint,” says Mr Ekpe. “We have been at it for 25 years and we developed a diversified operating platform across the countries that we operate, so we can do everything the local and foreign banks can do and more. This is the advantage we try to exploit.”

With more African households gaining discretionary spending power, McKinsey's projected household spending on banking in Africa predicts a rise of up to $30bn by 2020. This could be a boon to financial services providers such as Ecobank: “I hope Ecobank will emerge as the African banking champion in what I believe is a positive outlook of the African continent as a whole,” says Mr Ekpe.