FDI to SSA hit record high of 35.0
billion dollars...West Africa major
recipients
Foreign Direct Investment (FDI) flow into
Sub-Saharan Africa (SSA) shot to a
record high of 35.0 billion dollars in
2011 from the 27.4 billion dollars posted
in 2010 with West Africa receiving a
bulky 46 per cent.
This is higher than the 34.7 billion high
recorded in 2008.
According to the Economics and Political
Research Unit of Renaissance Capital,
West Africa was the largest recipient of
FDI in 2011, with almost half of the total-
46 per cent - followed by Central Africa
with 24 per cent and Southern Africa
with 18 per cent of inflows. East Africa
received a meager 11.3 per cent of
SSA’s FDI inflows.
Ghana, Nigeria and South Africa
collectively attracted half of the 2011 FDI
that flowed into the area. Ghana and
Nigeria together made up 75 per cent of
the sub-region’s inflows, concentrated
within the petroleum industry.
The Unit said Ghana, which was Africa’s
newest oil producer, drew FDI for the
newly developed Jubilee oil field and
while Tullow Oil, a UK oil company, plans
to invest $2bn (in 2013 and 2014,) to
establish an oil refinery in Uganda,
Nobile Energy, a US oil company, also
plans to invest $1.6bn (we think in the
short term, 2012-2013) to set up
production wells and a processing
platform in Equatorial Guinea.
It also indicated that FDI to West Africa
increased by 36 per cent to 16.1 billion
dollars in 2011, with Guinea exhibiting
the strongest improvement in FDI
growth last year.
According to the United Nations
Conference on Trade and Development
(UNCTAD), it expects this trend to
continue over the medium term owing to
the 6 billion dollar that the state-owned
China Power Investment Corporation
plans to invest in bauxite and alumina
projects.
The Unit further noted that Liberia,
Guinea and Ghana were the sub-region’s
largest recipients of FDI with 44 per cent
of GDP, 17 per cent and 9 per cent
respectively.
It said FDI into central Africa went to
three commodity-rich countries, mainly
oil-exporting Republic of Congo,
Equatorial Guinea and the mineral
exporting democratic Republic of Congo
(DRC).
However, the recovery in Southern
Africa’s FDI inflows was largely due to
the Region’s FDI rebounding in 2011
after falling by 78 per cent in 2010 and
doubling to 6.37 billion dollars.
East Africa, the continents’ traditional
lowest recipient of FDI saw a strong
recovery last year, with inflows
expanding in 2011 following the declines
in the previous two years.
East Africa’s FDI inflows expanded in
2011, following the declines in 2009 and
2010, to $3.96bn, which is just 5%
below the peak of 2008.
It noted that East Africa’s low ranking in
terms of FDI inflows reflects its relatively
low endowment of natural resources,
however, this is set to change over the
medium term owing to recent oil & gas
discoveries in the Region that has led to
East Africa being referred to as Africa’s
new oil frontier.
East Africa’s natural gas reserves,
particularly the offshore fields of
Mozambique and Tanzania, could
significantly boost the Sub-region’s FDI
inflows. In 2011, Mozambique’s FDI
inflows doubled to $2.1bn and new
discoveries are still being made, however
the development of gas fields and the
liquefied natural gas (LNG) industry
would require substantial upfront
investments, of which FDI would likely
play a significant role.
In the view of the Unit, Eni’s (Italian
company) plan to invest $50bn (likely
between 2013 and 2018-2020 in our
view) to develop the gas fields recently
discovered in Mozambique is one such
example
Source: www.GNA.com