Johannesburg - Local foreign direct investment (FDI) flows
reached the $5.9bn mark in 2011, boosted by American and Chinese investments,
according to a UN report on Thursday.
The World Investment Report 2012 was prepared by the United
Nations Trade and Development (UNTAD) and was presented to local journalists by
the Industrial Development Corporation.
This was a sharp increase compared to 2010, when the country
attracted just $1.2bn in FDI, and the second highest number in Africa after
South Africa's FDI flows in 2011 represented 13.6% of
Africa's total for last year.
Investment last year had been boosted by three large
investments, said Jorge Maia, the IDC head of research.
US retail group Walmart had bought a 51% stake in Massmart
Holdings [JSE:MSM] for $2.4bn.
China's Jinchuan Group bought base metals company Metorex
for $1.3bn and delisted the company.
Finally, the Chinese Investment Corporation had bought 25%
of diversified group Shanduka.for R2bn.
"With the exception of South Africa, Africa's leading
recipients of FDI in 2011 were oil and/or gas producers," said Maia, at
the report launch.
The report was compiled by the United Nations Trade and
Development (UNTAD). The IDC presented the report to local journalists earlier
in the day.
Ghana, Congo (Brazzaville) and Algeria rounded out the top
five investment destinations.
Maia noted that FDI continued to flow to oil-rich Angola,
but divestment and profit repatriations rendered the investment flows negative
for this country.
FDI flows into Africa fell for the third consecutive year to
reach $42.7bn in 2011, from $43.1bn in 2010.
This was largely due to a contraction in investment flows to
North Africa, as a result of instability in Egypt and Libya.
This region had traditionally accounted for a third of
investments in Africa.
However, FDI flows to sub-Saharan Africa jumped to $36.9bn
in 2011, from $29.5bn previously.
"The rebound in FDI to South Africa contributed
substantially to this recovery," said Maia.
Inward FDI to southern Africa recovered from a 78% decline
in 2010, more than doubling its total in 2011 to $6.4bn.
Developed countries invested relatively less in Africa
compared to other regions.
Developing countries and transition economies increased
their share of greenfield projects from 45% in 2010 to 53% in 2011.
East and South East Asian countries were the largest
investors in Africa, with a 15% share of greenfield projects, up from 11% in
South Asia, which includes India, had a 13.5% share.
Investment from African sources, including South Africa,
accounted for 12.6% of this total.
South Africa's total FDI stocks - representing the
cumulative total investment in the country - now accounted for 31.8% of GDP in
This was triple the amount of FDI stocks in 1995, when the
foreign investment accounted for just 9.9% of GDP.
Global foreign direct investment reached $1.54 trillion in
2011, exceeding the pre-financial crisis average of $1.47 trillion between 2005
But FDI flows were still 23% below the global pre-crisis
peak, said Maia.
During 2011, FDI flows to developing countries throughout
the world reached a record $684bn, an increase of 11% on 2010.
Developing countries accounted for 45% of global FDI flows
This increase was driven by East and South-East Asia, as
well as Latin America, he said.
UNTAD predicted slower growth in 2012 and a possible
levelling off of investment flows to $1.6 trillion.
"Longer-term projections show a moderate but steady
rise, with global FDI reaching $1.9 trillion in 2014, barring any macroeconomic
shocks," said Maia.
Developing and transition economies were expected to
maintain their high levels of FDI over the next three years.
The eurozone crisis and a fragile economic recovery would
test the FDI recovery in developed countries, however.
Africa's FDI prospects were deemed promising, with strong
economic growth, continuing economic reforms, and high commodity prices.
For the first five months of 2012, purchases of African
firms by foreign buyers had more than doubled compared to the same period a
South Africa was placed 14th on a list of top 20 investment
destinations for transnational corporations - ahead of the Republic of Korea.
China, followed by the United States, topped the list.
Maia noted that there was a new focus on sustainable
development as an investment goal.
A series of crises in finance, food security, and the
environment were having a profound effect on investment policy.
"Mobilising investment and ensuring that it contributes
to sustainable development objectives is a priority for all countries," he