From Africa Recovery, Vol.12#2 (November 1998), Watch page

African 'success stories' attract considerable FDI, says UNCTAD

Excluding South Africa, the African continent's share in total foreign direct investment (FDI) flows to developing countries was just 3 per cent last year, notes the World Investment Report 1998: Trends and Determinants, published by the UN Conference on Trade and Development (UNCTAD). The estimated $4.7 bn worth of FDI into African countries excluding South Africa in 1997 was $100 mn less than in 1996, but double the inflows in 1990.

While Africa as a whole remains marginalized in the global competition for FDI, a number of African countries attracted high inflows last year. After South Africa, the largest recipients were Nigeria, Egypt, Morocco, Tunisia and Angola, attracting two-thirds of the total for the region (see graph).

These "success stories" give Africa "signs of hope" in competing for FDI, remarked Mr. Georg Kell, an economist in the Office of the Secretary-General who helped launch the report at the UN in New York. "On a per capita basis, many [African] countries attract more FDI than do developed countries," added Mr. Kell. Moreover, rates of return on foreign direct investments in Africa "have consistently been high," according to the UNCTAD report.

Important factors contributing to the considerable FDI inflows into a number of African countries in 1997 include improvements in macroeconomic performance, enhanced business regulatory frameworks, and the implementation of other policies encouraging private enterprise.

Many of Africa's smaller economies that received relatively low amounts of FDI in absolute terms last year attracted high levels of FDI relative to their size. The sizeable natural resources possessed by many of these countries, as well as the strategic geographic locations of some countries for servicing larger African economies, were among the factors that attracted foreign investors, UNCTAD reports.

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