FDI projects grew by 27% in 2011, pushing Africa’s share of the world’s investment to almost a quarter.
FDI inflows, now about $80bn (£50bn), should reach $150bn by 2015, according to the global consultants.
But potential investors still see Africa as “the least attractive” destination, the report finds.
‘Story of progress’
Investment is close to levels last seen before the financial crisis, the firm said in its 2012 Africa Attractiveness Survey.
There have been significant inflows into the manufacturing, infrastructure-related and services sectors.
Ernst and Young found there was a “stark contrast” between those who had already invested in Africa and those who had not, with the latter concerned about corruption and political instability.
“In fact, for those respondents with no business presence in Africa, the continent is viewed as by far the least attractive investment destination in the world,” the report said.
“There are challenges, but we need to start having a different conversation about Africa where we focus on the positive stories,” Michael Lalor, head of Africa Business Centre at Ernst and Young’s Johannesburg office told the BBC.
“For us, the story of Africa is a story of progress, growth, a story of political and economic vibrancy,” Mr Lalor said.
He said Zambia saw a 93% rise in investments over the past year – a result of a well-managed economy and a peaceful handover of power.
Ghana, Botswana, Tanzania, Cape Verde and Mauritius also attracted high FDI inflows.
Africa itself is also helping to push up investments.
“Intra-African investment has grown substantially, more so than any other category in the last four years, being led by South Africa, Kenya and Nigeria,” Mr Lolar said.
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