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Recent FDI trends in Africa: Summary analysis of the UNCTAD World Investment Report 2017


Recent FDI trends in Africa: Summary analysis of the UNCTAD World Investment Report 2017

Talkmore Chidede, tralac Researcher, discusses recent trends in African foreign direct investment flows according to the latest World Investment Report

Despite efforts to attract foreign direct investment (FDI) by African countries, FDI flows to the continent continue to decline. According to the United Nations Conference on Trade and Development (UNCTAD) World Investment Report (2017),[1] FDI flows to Africa fell by 3 percent from $61 billion in 2015 to $59 billion in 2016, but with variance across regions and countries. The overall decline of FDI flows to the continent is largely due to weak commodity prices.

FDI inflows remain unequally distributed across the continent – with only five countries (Angola, Egypt, Nigeria, Ghana and Ethiopia) hosting 57 percent of continent’s total FDI inflows, while Africa accounts for 3.4 percent share of global FDI.

Regional trends

At the regional level, FDI flows to North, East and West Africa increased, but declined to Southern and Central Africa.

FDI flows to North Africa rose by 11 percent to $14.5 billion. This increase was boosted by positive inflows in Egypt (due to new gas discoveries) and Algeria (due to investment reforms and discoveries of oil).

Inflows to East Africa increased by 13 percent to $7.1 billion, driven by increases in Ethiopia, Mauritius and Madagascar – but Kenya and Tanzania fell by 36 percent to $394 million and 15 per cent to $1.4 billion, respectively.

Flows to West Africa grew by 12 per cent to $11.4 billion, propelled by Nigeria’s 45 percent increase (to $4.4 billion), Ghana’s 9 per cent (to $3.5 billion). The latter was driven by hydrocarbons and cocoa processing projects. Yet flows to Côte d’Ivoire and Senegal dropped by 3 and 4 percent, respectively.

FDI to Central Africa decreased by 15 percent to $5.1 billion because of commodity prices slump. This was mainly affected by substantial declines in Democratic Republic of the Congo (28% to US$1.2 billion) and Equatorial Guinea (77% to $54 million). However, FDI to Gabon and Congo increased by 13 per cent to $703 million and 8 per cent to $2 billion, respectively.

FDI to Southern Africa, fell by 18 per cent to $21.2 billion, due mainly to declines of FDI to in Zambia (70%), Mozambique (20%) and Angola (11%). FDI flows to South Africa grew by 31 percent to $2.3 billion, but still below its previous average. Despite the slump, the region has the highest share of continental FDI inflows, followed by North Africa, West Africa, East Africa and, lastly, Central Africa.

Outward FDI

Outward FDI from Africa (to the rest of the world) increased by 1 percent to $18.2 billion, with outflows from mainly Angola, South Africa, Nigeria, Morocco and Botswana – in that order. In 2016, Angola emerged as the region’s largest investor with major investment outflows by Sonangol enterprise, which recorded an increase of 35 percent to US$10.5 billion. Outflows from South Africa fell sharply from $5.7 billion in 2015 to $3.4 billion in 2016. Outward FDI from Nigeria fell by 9 per cent to $1.3 billion, with FDI from Morocco contracting by 2 per cent to $639 million. UNCTAD reports that many African multinational companies investing abroad were affected by ‘weak commodity prices and higher borrowing costs (as the value of local currencies fell and interest rates rose)’.


The United States remains the largest investor in Africa with FDI stock of $64 billion between 2010 and 2015, followed by the United Kingdom ($58 billion), France ($54 billion), China ($35 billion), South Africa ($22 billion), Italy ($22 billion), India ($17 billion), Singapore ($16 billion), Switzerland ($14 billion) and Malaysia ($12 billion).

Intra-African FDI increases were propelled mainly by firms from South Africa (e.g. Sanlam which purchased a 30 percent stake in Morocco’s Saham Finances for $375 million) and Morocco (e.g. Office Cherifien des Phosphates which signed a joint venture with Ethiopia to build a $3.7 billion fertiliser plant).

Sectoral distribution

Africa continues to attract more FDI in the services sector. In 2016, announced FDI projects were high services industry – mainly business services, infrastructure, real estate and electricity, gas and water – followed by manufacturing mostly in chemicals, renewable energy, textile and clothing, and automotives. Projects in the primary sector fell sharply reflecting the commodity prices slump.

FDI prospects

UNCTAD projects that inward FDI to Africa will increase by about 10 per cent in 2017, to almost $65 billion, based on modest oil price rises and a potential increase in non-oil FDI. These projections take into consideration current FDI projects in Africa, among these are the $900 million purchase of a stake in Tullow Oil in Uganda by a French oil company (Total), the launch of a $3.3 billion joint venture by the Africa Finance Corporation in Nigeria, and the US$759 million automotive plant by Beijing Automotive International Corporation in South Africa as well as South Africa’s Harith General Partners infrastructure fund to create one of the biggest pan-African energy companies – and, linked to this, are the multiple prospective infrastructure investments initiated by Chinese firms.

UNCTAD adds that the current inter- and intra-regional integration negotiations by African countries (such as the economic partnership agreements with the European Union, the Tripartite Free Trade Agreement and the Continental Free Trade Area) are expected to encourage FDI inflows to the continent.


[1] UNCTAD World Investment Report (2017), available at https://www.tralac.org/news/article/11726-digital-radically-changes-global-investment-patterns-says-world-investment-report-2017.html


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