Investment Doubled In Sub-Saharan Africa In 2013, U.N. Reports

Investment Doubled In Sub-Saharan Africa In 2013, U.N. Reports

South Africa, Mozambique, Nigeria, Egypt and Morocco are the top five African countries that received the most investment from abroad in 2013, according to a U.N. report.

Half of Africa’s economies experienced investment shortfalls. The other half — mainly mineral-exporting countries — registered significant increases, IndependentOnline reports.

The flow of investments into Southern Africa doubled to $13 billion in 2013 thanks to attractive investment climates in South Africa and Mozambique, according to the World Investment Report released Tuesday by the U.N. Conference on Trade and Development.

With massive gas and infrastructure projects, South Africa and Mozambique are the front runners in attracting global investment into Southern Africa, IndependentOnline reports.

Overall, African foreign direct investment flows rose by 4 percent to $57 billion in 2013. The increase attributed was attributed to “international and regional market seeking investments as well as infrastructure investments.”

North African investment inflows, however, declined by 7 percent to $15.5 billion. Morocco and Sudan attracted about $3 billion each.

West Africa’s inflows declined by 14 percent to $14.2 billion owing to “decreasing flows to Nigeria.” Oil projects in Ghana, Gabon and Ivory Coast, however, attracted “considerable investment from foreign transnational corporations during the period under review,” the report said.

Kenya and Ethiopia attracted increased investment flows into East Africa by 15 percent to $6.2 billion.

Nigeria is hot on South Africa’s heels.The west African country was the most favored among frontier markets for investments by the major American and European multinational companies, according to another report released this week. The Frontier Markets Sentiment index ranks Nigeria as the most attractive frontier market for investment. The index tracks the level of interest by major American and European multinational companies in African and other frontier economies, according to advisory and brokerage firm Imara Africa Investment.

South Africa still leads in attracting investment to Southern Africa from across the world, according to U.N. Conference on Trade and Development World Investment Report. It attracted investment to the tune of more than $8 billion in 2013. Major infrastructure projects accounted for most of it. In 2012, South Africa had total investment inflows of about $4.5 billion.

“In Southern Africa, investment inflows almost doubled to $13 billion, mainly due to record high flows into South Africa and Mozambique. In both countries, infrastructure was the main attraction. In Mozambique, investments in the gas sector also played a role,” Unctad said in a release accompanying the report.

Zimbabwe had investment inflows of about $400 million in 2013, the report said, roughly the same as 2012.

Uncertainty in Zimbabwe’s erratic regulatory framework was to blame for flat foreign direct investment, analysts said. More clarity is needed to revive investor interest in the country.

Nigel Chanakira, chairman of the Zimbabwe Investment Authority, also blamed uncertainty for the country’s flattening investment inflows.

Zimbabwe is targeting investment inflows of $1 billion in 2014. Economists say that number is unrealistic.

“The country is struggling and there’s still a long way before we start seeing meaningful new investments,” said a fund management and investment advisory company focused on Zimbabwe and the rest of Southern Africa. “Investors want to see clarity first before committing to new projects despite the fact that we have investment areas and projects that could be of interest to investors.”

Nigeria, Egypt and Morocco rounded out the list of the top five African countries that received the most investment from abroad in 2013, according to the U.N. report.

“Despite increasing their share of foreign direct investment into landlocked developing countries from 18 percent to 23 percent, the picture for African landlocked developing countries was mixed,” the report said.

Half of Africa’s economies experienced investment falls while the other half, mainly mineral-exporting countries, registered significant rises.

“Half the economies experienced falls and half – predominantly mineral exporting economies – registered an increase, with a strong performance in Zambia, where flows topped $1.8 billion,” the report said.

The report also noted that Kenya is developing as a favored business hub, not only for oil and gas exploration in the sub-Sahara region but also in industrial production and transportation services. Ethiopia’s industrial strategy is to attract Asian capital in order to develop its manufacturing base,” the U.N. said.

Overall world investment developments bucked declining trends and swung to growth in 2013, the U.N. said. Investment flows across the world grew by 9 percent year on year to $1.45 trillion.

The U.N. Conference on Trade and Development set a target of $1.6 trillion in global investment flows for 2014. By 2016, global cross-border investments are expected to grow to $1.8 trillion although uncertainty in some regions could affect this growth trajectory.