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Africa: FDI destinations in Africa





FDI destinations in Africa


In 20091 Angola received the largest amount of FDI, at USD 13.1 billion. Angola was followed by Egypt, with USD 6.7 billion, and South Africa and Nigeria with USD 5.7 billion each2.  In 2010 Angola is estimated to have received USD 7.9 billion, equivalent to 15% of all FDI to Africa in that year. Egypt, with USD 6.8 billion, and Nigeria, with USD 4.5 billion, follow. Libya, Morocco, the Republic of Congo and Sudan each received between USD 3 billion and USD 4 billion in FDI in 2010, while South Africa ranked eighth with USD 2 billion in FDI.

In terms of regional aggregates, Northern Africa has been the top destination for FDI in Africa between 2004 and 2008 and again in 2010, receiving a little more than one-third of all FDI flows to Africa. North Africa thus benefited enormously from the strong growth of FDI to the continent. In addition to attractive oil resources in Algeria, Libya, Egypt, Sudan and Tunisia, this surge is due to efforts by a number of governments in the region to open their economies to more foreign investment. In 2010 North Africa received USD 20 billion, up from USD 18.3 billion in 2009 but still significantly lower than its peak of USD 24 billion in 2008. Although Egypt receives by far the greatest amount of FDI in North Africa, its regional share has dropped from almost 40% in 2008 to 34% in 2010. Together with Egypt, Algeria saw a drop in FDI from USD 2.5 billion in 2009 to USD 1.5 billion in 2010. FDI to Libya is estimated to have increased USD 2.7 billion in 2009 to USD 3.8 billion in 2010.

Middle Africa has been the second FDI destination over the last years. The region was the first destination in 2009 with USD 18.7 billion, one third of FDI to African countries, but it fell back to USD 14 billion in 2010. The bulk of this investment is linked to the oil industry. Angola is by far the biggest FDI recipient in the region and accounts for about two-thirds of investments. The Republic of Congo comes second, with USD 2 billion in 2009 and USD 3.2 billion in 2010, followed by Equatorial Guinea with USD 1.7 billion in 2009 and USD 1.4 billion in 2010.

Western Africa has received about 20% of FDI to Africa over the last five years, attracting USD 10 billion in 2009 and USD 9 billion in 2010. Nigeria's oil industry is the main destination in the region. Nigeria received almost USD 6 billion in 2009 and USD 4.5 billion in 2010, accounting for 50% of FDI to the region. Ghana is the second largest recipient of FDI in the region, with USD 1.5 billion in 2010. FDI to Ghana has increased tenfold over the last five years, linked to Ghana's recent oil discoveries (production will start this year). This dynamism is only topped by Niger, which received USD 900 million in 2010, up from USD 30 million in 2005, and Liberia, which increased its FDI from practically nothing in 2005 to USD 350 million in 2010.


Over the last five years, about 11% of FDI to African countries has gone to Southern Africa, reaching USD 6.6 billion in 2009, down from USD 10 billion in 2008. In 2010 southern Africa experienced a further drop to USD 3 billion. South Africa is the main FDI destination in the region, accounting for 85% during 2007‑09. Unlike in most other African countries, much foreign investment in South Africa goes to the manufacturing sector. Especially in the automotive industry, South Africa has successfully applied investment incentives to develop an export-manufacturing industry (International Strategic Analysis, 2011a). Elsewhere in the region, foreign investment will be targeted at the large mining and tourism industries in countries such as Namibia and Botswana (International Strategic Analysis, 2011ab.

Eastern Africa's share of FDI to African countries is the smallest, amounting to 8% over the last five years. For 2010 FDI to eastern Africa is estimated at USD 6 billion, up from USD 5 billion in 2009. Zambia has been the region's top recipient, with about USD 1 billion annually over the last three years, mainly directed at its mining industry. With almost 900%, Mozambique had the highest east African growth rate over the last five years, reaching USD 900 million in 2010. This surge consists mainly of megaprojects in resource extracting industries, notably in coal and aluminium. These megaprojects reward Mozambique's efforts in setting up special economic zones (SEZs) and providing attractive legal and fiscal conditions for investors.

Except for Uganda, where oil reserves have recently been discovered, the other countries in the region have no significant natural resources, attracting lower amounts of FDI. Although low in value, east Africa's share of investment in terms of numbers of projects is significant. During the first quarter of 2010, 25% of African greenfield investment projects were in the region, reflecting the focus on market seeking investment in the productive and service sectors, which are much smaller in value than extractive industry projects. 

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