Foreign direct investment inflows into Africa fell in 2011 for the third consecutive year - but could more than double by 2014, as stronger economic growth, ongoing reforms and high commodity prices improve investor perceptions, the United Nations says.

The decline in investment, from $43,1 billion in 2010 to $42,7 billion in 2011, was largely due to reduced inflows to North Africa as social and political unrest in Egypt and Libya deterred investors, according to the 2012 World Investment Report. Africa’s share of global FDI also dropped from 3,3% in 2010 to 2,8% in 2011.

However, inflows to sub-Saharan Africa jumped 25% to $36,9 billion in 2011, close to its peak of $37,3 billion in 2008, as commodity-rich countries in west and central Africa saw a rise in new projects.

The report, published by the United Nations Conference on Trade and Development, said Africa’s FDI prospects for 2012 were promising and forecast average flows of between $55 billion and $65 billion in 2012. It projected this would grow to $70-$85 billion in 2013 and $75-$100 billion in 2014.

“Inflows to Africa are expected to recover as a result of stronger economic growth, ongoing economic reforms and high commodity prices, as well as improving investor perceptions of the continent, mainly from other emerging markets,” the report said.

For the first time, FDI inflows from developing economies into Africa ($45,5 billion), outstripped those from developed economies ($43,2 billion), the report showed.

“In terms of green field (new) projects, which account for over 90% of total FDI, the largest developing-economy investors in 2011 were India, South Africa, China, Korea and Mauritius,” said James Zhan, director of UNCTAD’s investment and enterprise division.

Africa’s emerging middle class has also spurred the growth of FDI in the services sector, though FDI to the extractive industries tends to attract more attention, Zhan said.

The study highlights the contrasting fortunes of North Africa, traditionally the recipient of a third of inward FDI to Africa, and the rest of the continent. Inflows to the region halved to $7,69 billion in 2011, dwarfed by the $16,1 billion investors poured into west Africa and the $8,53 billion into central Africa.

Commodity-rich countries, such as Nigeria, Ghana, Congo, Equatorial Guinea and the Democratic Republic of Congo, attracted the bulk of FDI in their respective regions. Nigeria, Africa’s top oil producer and most populous nation, received inflows of $8,92 billion, representing a fifth of all flows to the continent.

However, the report said new oil- and gas-producing countries such as Ghana, where commercial oil production started in December 2010, and Mozambique, where major discoveries of gas reserves are expected to transform the economy, should experience strong FDI growth in the future.

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Fri May 24 14:39:04 SAST 2013 ::

Jul 6, 2012

Deepstick-C

Thats the reason why countries with resources in africa must nationalise...our people are poor and they should benefit (DIRECTLY) from their minerals & other resources.

Greedy westerns suddently realise africa is booming now they want every piece of africa...Power to a black man, power!
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Jul 6, 2012

B4LES

Good news for African continent.We just need to get our house in order.Do away with Dictatorship, inequality, unemplyement,poverty, greedy,nepotism,favourism,cadre deployement,factionalism and laziness to think constructively. Africal leaders should think state presidency is a life time occupation.Must learn to serve one term (or two if majority decides so) and retire with dignity, like Madiba did.
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Jul 6, 2012

B4LES

I wanted to say African leaders shold NOT think state presidency is a life-time-occupation.
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Jul 6, 2012

Deepstick-C

@B4LES are you specifically referring to Zoomer aka Showerman here?
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Jul 6, 2012

B4LES

@ Deepstick-C

Yes good sir,him and others in Africa,the past and the present. The likes of Zim's Mugabe 32 yrs,Egypt' Hosni Mubarak >30yrs,Uganda's Yoweri Museveni 25yrs,Camerron;s Ahmmadou Ahidjo 29yrs,Angola's Jose Eduardo dos Santos 31 yrs, Equitorial Guinea's Teodoro Obiang Nguema Mbasongo 32 yrs, Libia's Colonnel Mummar Gaddafi >40yrs.
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Jul 6, 2012

9janavy

Democracy is rubbish,it promotes corruption and does not allow the right people to be in power.Big money funds political parties which in turn leads to favors being returned at the expense of the masses.We should develop a new system of Government in Africa that will ensure that the right people are in right position.The history of Africa has shown us that Africans always vote for the wrong leaders due sentimental reasons.An example of this is the current situation in SA.
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