WINDHOEK – Foreign Direct Investment (FDI) into Africa has increased dramatically in the last decade and a half to the extent that FDI inflows to Africa are expected to exceed US$60 billion this year, said William Blackie, Deputy Head of Investment Banking, Corporate and Investment Banking, Standard Bank Group.
“Africa continues to be a bright spot on the global FDI landscape, even as investment in industrialised economies continues to struggle. FDI inflows to developed economies declined by 32 percent in 2012 to US$ 561 billion, according to the World Investment Report. By contrast, FDI inflows to Africa rose for a second consecutive year in 2012, climbing by 5 percent year-on-year to US$50 billion. That made Africa one of the few regions world-wide to register year-on-year growth in 2012,” said Blackie on the sidelines of the fourth annual Standard Bank Africa Investors’ Conference in London this week.
The conference is being attended by policy makers, African corporates and institutional investors from numerous countries, including South Africa, Nigeria, Ghana, Kenya, Uganda Mozambique, Zambia and Rwanda.
In 2000 not a single African country attracted more than US$2 billion year-on-year in FDI inflows, while by the end of 2012 no less than eight countries on the continent had attracted more than US$2 billion year-on-year in FDI.
“FDI is also emerging as an important source of infrastructural investment for the continent with the 2014 Africa Economic Outlook revealing that between 2001 and 2011 FDI accounted for about 16 percent of the continent’s gross fixed capital formation. That compares to a global average of 11 percent, meaning FDI is a major source of investment in infrastructural capital such as roads, bridges, dams and the like in Africa,” said Blackie.
FDI inflows into Africa remain concentrated among a relatively small number of countries. The continent’s top six FDI beneficiaries in 2013 were South Africa (US$6,4 billion); Nigeria (US$6,3 billion); Mozambique (US$4,7 billion); Morocco (US$4,3 billion); Ghana (US$3,3 billion); and Sudan (US$2,9 billion).
“As the 2014 Africa Economic Outlook notes, the continent’s top six FDI recipients in 2013 represent just a third of the continent’s population and received the same amount of foreign direct investment as the remaining 48 countries combined. There is thus much scope to increase Africa’s FDI opportunities and spread it away from last year’s major recipients, who were also the largest beneficiaries in 2012.”
Although South Africa looks set to lose its mantle as the biggest destination for FDI on the continent to Nigeria, which absorbed almost one-fifth of total FDI flows to Sub-Saharan Africa last year, Africa’s most advanced economy is emerging as a significant source of investment for other nations on the continent.
“According to our research, South African investment into the rest of Africa has increased considerably with investment in new projects growing at a compound annual growth rate of about 65 percent since 2007. South Africa’s total FDI stock in Africa has also increased from R15 billion in 2001 to R122 billion by 2010. Nigeria’s emergence as the continent’s biggest economy means it is also likely to become a major source of FDI flows to other African nations going forward,” said Blackie.
By Staff Reporter