Investor Presentaiton
5.3 INFLOW OF FDI TO AFRICA
Africa received foreign direct investment (FDI) inflows of US$ 53 billion in 2007.
World Investment Report reveals. The region also trumped the world's other
developing regions by providing the highest rate of returns on FDI for the past
two years.
The surge in FDI to the region, and its profitability, were driven by the boom in
global commodity prices and by Africa's changing policy environment. North
Africa attracted 42% and sub-Saharan Africa 58% of FDI to the region.
Africa's FDI inflows in 2007 continued to be geographically concentrated: the top
10 host countries Nigeria inclusive accounted for over 82% of total inflows
(figure 5.3.2), and nine countries received inflows of US$ 1 billion or more. The
surge in FDI to the region, and its profitability, were driven by the boom in
global commodity prices and by Africa's changing policy environment. North
Africa attracted 42% and sub-Saharan Africa 58% of FDI to the region.
Investment in African least developed countries (LDCs) also grew for the second
consecutive year.
As a result of the commodity price boom, income on inward FDI grew by 31% in
2007, and the rate of return on investment in Africa was the highest among
developing regions in 2006 and 2007. A large proportion of FDI in 2007
concentrated on expanding projects related to natural-resource exploitation,
partly through reinvested earnings. Consequently, the share of reinvested
earnings in total FDI inflows increased to 28%. Among the major natural-
resource producers, FDI in natural-resource exploitation contributed to
accelerated export growth. Foreign-exchange reserves in the region grew by
some 36% in 2007, and by even more in some major oil-exporting countries such
as Nigeria and the Libyan Arab Jamahiriya.
Despite higher inflows, Africa's share of global FDI remained at about 3%.
Transnational corporations (TNCs) from the United States and Europe were the
main investors in the continent, followed by African investors, particularly from
South Africa. TNCs from Asia concentrated mainly on oil and gas extraction and
on infrastructure.
FDI inflows into Africa rose to $88 billion in 2008 - another record level, despite
the
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