Investment by IT companies in Africa has been in the spotlight recently, with US-based multinationals IBM and Hewlett Packard both announcing major investments on the continent.
According to data from fDi Markets, the number of FDI projects in the software and IT sector has decreased from a high of 55 in 2008 to 44 in 2010, reflecting the global downturn. FDI projects recorded so far for 2011 indicate that this figure is unlikely to increase much in 2011.
The data for capital investment and job creation prove much better indicators of the increase in investment in the software and IT sector during 2011, however. Capital investment reached $531.9m in 2008, a 42% increase from 2007. This fell sharply in 2009 before recovering to $446.4m in 2010. The first eight months of 2011 have seen a dramatic increase in capital investment, with $801.9m invested in the African software and IT sectors already.
In 2007, 3816 jobs were created in the software and IT sectors in Africa. This steadily decreased each year to 2010. However, the data up until the end of August shows that 5946 jobs have been created so far in 2011, with this set to rise even further by the end of the year.
Over the entire period from 2003 to the present, US-based companies have consistently been the main investors in the African software and IT sector. However, US companies were relatively quiet in this regard in 2010. India and the UK-based companies invested heavily in terms of jobs and capital investment in 2010, with India-based companies creating 1050 jobs on the continent.
In terms of destination countries, South Africa has consistently been the most popular destination for IT companies investing in Africa.