Dar now ranked least in FDIs

A bird’s eye of Dar es Salaam, one of the fastest growing cities. In a study conducted between 2012 and 2015, is Africa’s least ranked in FDIs. PHOTO | FILE 

In Summary

Estimates by database fDi intelligence show that Dar es Salaam’s performance was poor both in inward and outward financial services FDIs.

By Felix Lazaro

Dar es Salaam. A study by database fDi intelligence has unveiled poor performance of Dar es Salaam Commercial City both in inward and outward foreign direct investments (FDIs).

The city was ranked the least African financial hub in the period between 2012 and 2015.

Estimates by database fDi intelligence show that Dar es Salaam’s performance was poor both in inward and outward financial services FDIs.

In the area of FDI inflows, where 10 financial hubs were studied, Dar es Salaam remained chasing the shadows of other centres after it was ranked 10th– the least in the category.

The rank follows $60.8 million FDI inflows that Dar es Salaam attracted, which was the lowest amount attracted by studied financial centres. Legal consultant Kibuuka Law Chambers managing partner Paul Kibuuka, who is also dealing with investors, sees that both external and internal factors have contributed to a downward trend in FDI inflows.

“Externally, global uncertainty linked to slow recovery of the eurozone and concerns about growth in major emerging markets affected investor sentiment,” he said. His views also show that domestically, this year’s general election might have brought about a wait-and-see approach from international investors, but given Tanzania’s history of peaceful elections, financial services FDI inflows are expected to pick up significantly in 2016.

Johannesburg leads the group by attracting $234.8 million, which was the highest value, followed by Accra, which attracted $214.5 million financial service FDIs. The second runner up was Nairobi whose FDI inflows were valued at $175.8 million.

“Johannesburg is the leading destination for FDI inflows as it attracted the largest volume in three years ending in March, 2015 with a total of $234.8 million directed to its financial service sector,” notes database fDi intelligence. FDI inflows in East Africa were dominated by Nairobi followed by Kampala with $66 million and last was Dar es Salaam. Kigali and Bujumbura were not included in the study.

Dar es Salaam only showed slight improvement in outward FDIs after it was ranked ninth position with its projects valued at $55 million, better than $47.6 million of Centurion, a South African financial centre. In this group, Casablanca recorded the highest value of outflows of $1022.6 million projects, followed by Johannesburg with $654.4 million and Luanda got $480.7 million. With more than $1 billion capital expenditure in the sector, Casablanca’s outward FDIs in financial centres was almost double that of second placed Johannesburg, which recorded $654.4 million investment. “Moroccan lender BMCE Bank accounted for 36 of the 38 projects originating in Morocco, with its activity predominantly in Europe,” notes the database fDi intelligence.

France was the most popular destination for BMCE’s investments, with 12 projects recorded in the country. Kenya remained a leader in the East Africa banking sector as its city recorded $372.4 million FDI outwards, making it the fourth financial centre in Africa and the first financial hub in East Africa.

According to the estimates, the FDIs both inwards and outwards created employment in their respective countries. Kenya’s projects registered 1,698 jobs, the highest number in Africa. About 1,190 jobs were created in outwards FDIs while the remaining 508 were created by inwards FDIs. South Africa’s financial sector followed by creating 1494 jobs from its 59 inwards and outwards FDI projects and Casablanca’s 53 projects (inwards and outwards FDIs) created 1075 jobs. Although Dar es Salaam performed poorly in terms of value of FDIs, it witnessed its 10 projects (inwards and outwards) creating 348 jobs. The Kampala financial sector, which was only categorised in inwards financial service FDI created 180 jobs from six projects. It was observed that African financial centres have been net receivers of FDIs, with $4.6billion of inward investment in the three years to March, compared with outflows of $3.8billion in the same period.

The continent attracted 398 projects through FDIs, which created 10,832 jobs, while there were 215 projects in outwards FDIs which created 6,033 jobs.