Investment into Africa ignores global trend

UNCTADs World Investment Report

Investment into Africa ignores global trend

Foreign direct investment (FDI) flows to African countries increased by 5% to more than R495 billion in 2012 even as global FDI fell by 18%, according to the latest annual survey of investment trends by the United Nations Conference on Trade and Development (UNCTAD).

Unctad's World Investment Report 2013 was released in Geneva, Switzerland and found that, while investment in extractive industries remained the most important driver of FDI to Africa in 2012, there was increased investment in consumer-oriented manufacturing and services, reflecting the growing purchasing power of the continent's emerging middle class.

"Between 2008 and 2012, the share of consumer-related industries in the value of greenfield investment projects in Africa grew from 7% of the total to 23%," Unctad said in a statement.

Greenfield investment is investment in businesses or economic sectors that are new to a recipient country.

The report found that companies from emerging markets were increasingly active in Africa, with the biggest investors in 2012 being Malaysia, South Africa, China and India in that order.

South African companies were active in acquiring operations in industries such as mining, wholesale and healthcare during 2012, pushing FDI outflows from South Africa up to 

R43.5 billion and elevating the country to the position of largest source country of FDI in Africa.

By contrast, however, FDI inflows to South Africa dropped by 24% to R45.6 billion last year.

This mirrored a sharp drop in investment in the southern African region, from R86.2 billion in 2011 to R53.5 billion in 2012 – even as some countries in the region saw substantial increases.

Inflows to Mozambique, for example, doubled to R51.5 billion, attracted by the country's huge offshore gas deposits.

FDI flows to West Africa also declined, slipping by 5% to R166.5 billion, the report show.

Of investment channelled to the two major oil-producing countries in the region, FDI to Ghana remained stable at R32.7 billion, but inflows to Nigeria declined by 21% to R69.4 billion, accounting for much of the diminished flows to the region.

Energy resources such as recently discovered gas reserves in Tanzania and oil fields in Uganda saw FDI inflows to East Africa expand from R44.6 billion in 2011 to R62.4 billion in 2012.

Central Africa, meanwhile, saw its inflows rise to more than R99 billion, a record high, maintaining a trend of increasing FDI since 2010.

The region's natural resources continued to attract investment from mining companies, with significant FDI, for example, targeting the expansion of the copper-cobalt Tenke Fungurume mine in the Democratic Republic of the Congo.

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