Increasing Agricultural Productivity:
Encouraging Foreign Direct Investments in the COMCEC Region
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Cost factors (in order of importance)
 Wage levels: combination of labour-intensive activities and low labour costs;
 Cost of real estate: land-intensive nature of horticulture production; and
 Cost of transport: just-in-time-shape delivery.
Figure 24: Breakdown of cost (left) and quality (right) motivations for horticulture FDI
Source: MIGA 2007
Figure 24 shows how each of the cost and quality factors in the horticulture industry are
then prioritized. A similar study has been carried out for the food & beverage industry82.
Though agricultural too, this industry is rather distinct from horticulture as it includes the
manufacturing, processing and preservation of meat, fish, fruit, vegetables, oils, facts, diary,
bottled and canned drinks. Indeed, agro-processing is one of the most important manufacturing
activities in sub-Saharan Africa. FDI in this agricultural subsector is raising as market saturation
and the search for higher profit margins in new underserved markets triggers FDI. Foreign
investors look to capitalize on increased local demand for higher value foods whereas
simultaneously, consumer-driven changes push food manufacturers to meet consumer demand
and preferences at local level. FDI in food & beverage can thus be considered as both market- as
well as efficiency-seeking.
82 FAO, 2008; MIGA, 2007.