Italy quietly joins ranks of Africa’s major players
Italy has become the world’s sixth biggest investor on the African continent. Italian companies, like the oil and gas giant, Eni are expanding their operations in African countries.
Italian companies have been increasing their presence on the African continent in recent years.
According to the United Nations Conference on Trade and Development (UNCTAD), Italy’s foreign direct investment (FDI) grew to €28 billion in 2018. This makes Italy the sixth largest global investor in Africa after France, Netherlands, United States, United Kingdom, and China.
While Italy’s focus seems to be on North Africa, its two main recipients of FDI were South Africa ($4.5bn) and Nigeria ($1.3bn) last year.
Eni symbolises Italy’s presence
The partially state-owned (30%) hydrocarbon firm, Eni has significantly boosted Italy’s position in the rankings. It makes the largest FDI contributions in Africa compared to any other Italian company.
The group has also become a major gas player thanks to the rise of the Egyptian mega-field in Zohr.
Half of Eni’s global production and 60% of its reserves come from 14 countries in Africa. Offshore Cape Three Points (OCTP) in Ghana, is one of the company’s key projects on the continent, according to Eni spokesperson, Marilia Cioni.
Other Italian companies are trying to play catch-up with Eni.
Under CEO Francesco Starace, Enel Green Power has become one of Africa’s leading private operators in renewable energy.
Enel operates in South Africa, Zambia, Ethiopia, Kenya, Morocco, and Zambia. It recently launched the RES4Africa Foundation – a platform for training, technical assistance, and expertise.
Another Italian company, Terna manages high-voltage electricity transmission networks.
Energy at the heart of Italian investment in Africa
Terna has partnered with Tunisia’s gas and electricity group, Steg to deliver a major 600 MW trans-Mediterranean electricity interconnection project called Elmed. The project will link the networks of the two countries.
Another Italian firm, Salini Impregilo – which builds hydroelectric power plants and hydraulic structures – operates in more than 50 countries. Over the past 70 years, the company has boosted its presence across Africa.
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The continent now accounts for 17% of Salini Impregilo’s turnover. It built Ethiopia’s Gibe III and Renaissance dams, Zimbabwe’s Kariba dam, and Ghana’s Akosombo dam.
In southern Namibia, the multinational has built the Neckartal rainwater dam for irrigating agricultural land.
- “The transport, agro-industry, and energy industries together represent 63.6% of the portfolio of Italian projects in Africa,” say experts from the Export Trading & Cooperation (ETC). According to ETC – an Italian firm that supports investment projects for companies and banks – the food industry also accounts for 9.1% of this portfolio.
Cement and agri-food
Famous Italian brands that once exclusively targeted Europe are also expanding into Africa.
The company that makes Nutella (confectionery specialist, Ferrero) has a commercial presence in 54 countries on the continent, and an industrial presence in South Africa and Cameroon.
In Yaoundé, Ferrero produces for the Cameroonian market as well as for Nigeria and the Central African Economic and Monetary Community (CEMAC) Free Trade Area.
SMEs are also coming to the African continent. They are mainly involved in the supply of industrial equipment, particularly in cement and agri-food.
- “Last year, the demand for project support increased by 30%,” says Anco Marzio Lenardon, president of UniAfrica. The company was created ten years ago by the Italian Chamber of Commerce.
Many companies in Italy’s northern regions, including Emilia Romagna or Veneto, which were once concentrated in Russian or American markets, are now looking for new opportunities.
Bottom Line: As global markets shift, Italian firms are moving into Africa.