U.S., U.K. Lead In Africa Foreign Direct Investments, China Is Far Behind
The top three investor economies to Africa in 2015 were the U.S., ($66 billion), the U.K. ($64 billion), and France ($52 billion), according to a new U.N. report.
China’s investment in Africa more than tripled from $9 billion to $32 billion in 2015, making it the fourth-largest investor on the continent. South Africa was the fifth largest at $26 billion,
Globally, direct investment flows increased by 40 percent, according to World Investment Report 2016 by the U.N. Commission on Trade and Development.
However, Africa didn’t share the increase. Overall foreign direct investment to Africa declined by 7 percent, giving the continent 3 percent of the total worldwide investment, Africa-Me reported.
Investment increased in North Africa, especially Egypt, but decreased in sub-Saharan Africa as resource-based commodities experienced declines and economies weakened. South Africa led the decline with a 60 percent-plus decrease in FDI in 2015.
The global investment surge of 2015 is attributed a spate of cross-border mergers and acquisitions, and isn’t expected to continue, according to Africa-Me.
In Africa, the U.N. said investment could grow in 2016. New projects valued at nearly $30 billion were announced in the first quarter of the year, up 25 percent from the same period a year earlier.
The largest increases in foreign direct investment to Africa in 2016 are expected in Egypt and North Africa. But there is reason to be optimistic in Ethiopia, Mozambique, Rwanda and Tanzania, the report said.
Depressed oil and mining commodities prices will continue to be a drag on investment in other parts of Africa.
FDI to West Africa was largely weakened by low commodity prices.
Foreign direct investment to Ghana in 2015 declined 4.9 percent, Ghana Business News reported. The country had FDI inflows of $3.2 billion in 2015.
Zambia ranked in the Top 20 FDI destinations in Africa at No. 17 out of 54 countries with inflows of $1.7 billion, Lusaka Times reported. That was down 48 percent from 2014, due mostly to electricity shortages and uncertainties related to the mining tax.
Angola saw a 352 percent increase in FDI in 2015. Inflows of $8.7 billion made it the largest FDI recipient in Africa and least developed countries, largely due to an increase in loans by parent companies abroad, according to a report by the International Centre for Trade and Sustainable Development.
Investment to Egypt grew 49 percent to $6.9 billion, reflecting expansion of foreign investment in banking, pharmaceuticals and telecommunications.
Investment in Sudan increased 39 percent to $1.7 billion, mainly due to Chinese investment in oil production.
DRC and Congo
In Central Africa, investment inflows dropped by more than 33 percent to $5.8 billion. The Democratic Republic of Congo and Congo reported declines as commodities producers stopped operations.
East African investment was steady at $7.8 billion. The E.U. and the U.S. invested more than $2 million in Ethiopia. Investment in Kenya reached a record $1.5 billion due to investor confidence in the business environment and growing domestic consumption, Africa-Me reported.
Investment in South Africa fell by 69 percent to $1.8 billion, its lowest level in a decade. Weak economic performance, lower commodity and higher power costs were to blame, according to the U.N.
After years of record growth, Mozambique saw a 24 percent decline to $3.7 billion. Uncertainty over the 2015 elections, lower gas prices and cancelled mining operations were to blame, the U.N. reported.