South Africa was continent’s top FDI recipient in 2013

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South Africa was continent’s top FDI recipient in 2013

South Africa was continent’s top FDI recipient in 2013
Photo credit: EWN

Foreign direct investment flows to Africa increased nearly 7 percent to an estimated $56 billion last year, nearly a fifth of which went to top recipient South Africa, a United Nations report said on Tuesday.

Africa, along with Latin America and the Caribbean, helped drive FDI inflows to developing economies to a new high of $759 billion in 2013. That was more than half of global FDI, the United Nations Conference on Trade and Development said in its latest Global Investment Trends Monitor.

Sub-Saharan Africa’s robust economic growth, which the IMF expects to increase to 6.1 percent in 2014, from 5.1 percent last year, has made it an attractive destination for investors.

South Africa’s performance has lagged the rest of the region, however, with the IMF forecasting growth of 2.8 percent in the continent’s biggest economy this year, an increase from 1.8 percent in 2013.

Investors have also been unnerved by recurrent labour unrest, most recently a platinum mining strike that began on Thursday which has hit half of global output of the precious metal.

Despite these woes, FDI inflows to South Africa more than doubled to $10.3 billion in 2013, UNCTAD said, while other African countries like Nigeria and Ghana saw a decline in investment.

Most of the rise in FDI flows to South Africa was due to greenfield, or new investment, particularly in the consumer goods sector, said Masataka Fujita, head of UNCTAD’s investment trends and issues branch.

Mozambique, where companies like Brazil’s Vale, London-listed Rio Tinto and Italy’s Eni are developing huge offshore gas and coal deposits, was another strong performer, attracting inflows of $7.1 billion, up more than 30 percent from a year ago.

Inflows to Africa’s top crude oil producer Nigeria declined about 20 percent to $5.5 billion, the report said, largely due to asset sales by foreign oil companies such as Royal Dutch Shell and Chevron.