SA foreign direct investment jumps 38% in 2016 - Unctad

Cape Town - South Africa saw a 38% increase in foreign direct investment (FDI) inflows in 2016, though they remained at a relatively low level of $2.4bn, according to the latest Global Investment Trends Monitor of the United Nations Conference on Trade and Development (UNCTAD).

At the same time, global FDI flows fell 13% in 2016, reaching an estimated $1.52trn, as global economic growth remained weak and world trade volumes posted anaemic gains.

"This decline was not equally shared across regions, reflecting the heterogeneous impact of the current economic environment on countries worldwide," according to the report.

Foreign Direct Investment (FDI) flows to Africa registered a decline of -5% to $51bn, with the region sharing similar external vulnerabilities with Latin America, according to the latest Global Investment Trends Monitor of the United Nations Conference on Trade and Development (UNCTAD).

The low level of commodity prices continues to have an impact on resource-seeking FDI. Flows to Angola more than halved after surging in 2015. Mozambique saw its FDI fall 11%, but the level was still significant at an estimated US$3 billion.

READ: African countries must unite to negotiate against nativism, nationalisation - Unctad

However, there was some uptick in flows to parts of Africa, centred on traditional FDI recipients such as Egypt (from $6.9bn to $7.5bn) and Nigeria (from $3.1bn to $4bn).

"Slowing economic growth and falling commodities prices weighed on FDI flows to developing economies in 2016. Inflows to these economies fell 20% (to an estimated $600bn) in the year, because of significant falls in Developing Asia and in Latin America and the Caribbean," according to the report.

"There was a widespread downturn in cross-border M&A activity across developing sub-regions during the year, which fell 44% in terms of aggregate value. In contrast, the value of announced green field projects rose 19% to reach $540bn, but this was largely due to the announcement of a few very large investments in a small number of countries, as the majority of countries recorded falls."

Read Fin24's top stories trending on Twitter: Fin24’s top stories