FDI To Africa Increases

Foreign Direct Investment (FDI) flows to Africa increased by 5 per cent to US$50 billion in 2012 even though global FDI dropped by 18 percent.

FDI inflows to West Africa declined by 5 per cent, representing $16.8 billion while investments to Ghana remained stable at $3.3 billion.

The World Investments Report 2013 by UNCTAD, which made this known, also said investments to Nigeria declined by 21 per cent, representing $7.0 billion.

It said that investments in the extractive industries contributed greatly to FDI inflows to Africa.

Subtitled: “Global Value Chains: Investment and Trade for Development,” the report, which was launched on Tuesday in Accra, said aid projects in manufacturing and services also recorded an increase in investments.

Philip Cobbina, a lecturer at GIMPA, who presented the report, noted that FDI flows to North Africa was pegged at 35 per cent, representing $11.5 billion in 2012 and attributed it to inflows in Egypt where net divestment increased from $0.5 billion in 2011 to $2.8 billion in 2012.

Energy resources in the United Republic of Tanzania and oil fields in Uganda attracted FDI to East Africa.

As a result, inflows to the region expanded from $4.5 billion in 2011 to $6.3 billion in 2012, the report says.

But FDI flows to Southern Africa fell sharply from $8.7 billion in 2011 to $5.4 billion in 2012.

Inflows to Mozambique, for example, doubled to $5.2 billion.

Natural resources continued to attract investment from mining transnational corporations (TNCs).

While it is apparent that natural resources are still the mainstay of FDI flows to Africa, the report noted that FDI in consumer-oriented manufacturing and services is beginning to increase, reflecting the growing purchasing power of the continent’s emerging middle class.

FDI outflows from African countries almost tripled in 2012 to $14 billion, the report says.

 By Ernest Nutsugah