Africa

Countries:
Botswana | Cameroon Gambia Ghana Kenya Lesotho Malawi Mauritius Mozambique Namibia Nigeria Rwanda Seychelles Sierra Leone | South Africa  | Swaziland Tanzania Uganda Zambia

FDI trends and prospects in Africa

In 2010 the stock of FDI into African Commonwealth countries stood at US$250 billion, or a little less than 10 per cent for the group as a whole. South Africa and Nigeria were the largest recipient countries, but significant amounts are invested in many other economies, such as Ghana, Tanzania, Uganda and Zambia. In recent years, FDI to African Commonwealth economies has been dominated by the oil industry.

While Nigeria is one of the top three oil producers in Africa, oil reserves have been found in Ghana and Uganda where a new oil industry is beginning to emerge. In 2010, inflows to Nigeria declined considerably as political and regulatory uncertainty discouraged foreign investors. In contrast, in Ghana and Uganda, the start of major oil production has attracted the interest of foreign investors, some of which are seeking an alternative source of oil to Nigeria.

Over the years, South Africa has been one of the largest recipients of FDI in Africa. In 2010, however, its inflows fell by over 70 per cent to US$1.6 billion, a level barely one-sixth of the peak recorded in 2008; but FDI inflows are expected to recover for both this and other African Commonwealth economies.

As an investor, South Africa used to be the only country in sub-Saharan Africa with sizeable amounts of outward FDI. More recently, however, Nigeria has also emerged as a significant active investor; and a few other countries, such as Zambia, are also active. Nigerian banks have established their reputation as bringing in innovative services to neighbouring countries in West Africa, and many of its leading banks have an extensive presence throughout the region, although some retrenchment could well take place in the aftermath of the banking crisis in 2009.

 

In terms of cross-border M&As, one of the largest M&A deals worldwide in 2010 was the acquisition of the telecoms operations of Zain (Kuwait) in 15 African countries (not including those in North Africa) by the Indian mobile operator Bharti Airtel for US$10.7 billion. Although the deal itself did not bring in any net external finance to Africa at the time of acquisition simply because of changes in ownership, the new owner announced that it would invest US$1 billion to expand its operations in Africa in 2011, which will be partly financed through regional headquarters based in Nairobi, Kenya. This type of regional investment heralds a rising trend.

FDI trends and prospects in Africa

In 2010 the stock of FDI into African Commonwealth countries stood at US$250 billion, or a little less than 10 per cent for the group as a whole. South Africa and Nigeria were the largest recipient countries, but significant amounts are invested in many other economies, such as Ghana, Tanzania, Uganda and Zambia. In recent years, FDI to African Commonwealth economies has been dominated by the oil industry.

While Nigeria is one of the top three oil producers in Africa, oil reserves have been found in Ghana and Uganda where a new oil industry is beginning to emerge. In 2010, inflows to Nigeria declined considerably as political and regulatory uncertainty discouraged foreign investors. In contrast, in Ghana and Uganda, the start of major oil production has attracted the interest of foreign investors, some of which are seeking an alternative source of oil to Nigeria.

Over the years, South Africa has been one of the largest recipients of FDI in Africa. In 2010, however, its inflows fell by over 70 per cent to US$1.6 billion, a level barely one-sixth of the peak recorded in 2008; but FDI inflows are expected to recover for both this and other African Commonwealth economies.

As an investor, South Africa used to be the only country in sub-Saharan Africa with sizeable amounts of outward FDI. More recently, however, Nigeria has also emerged as a significant active investor; and a few other countries, such as Zambia, are also active. Nigerian banks have established their reputation as bringing in innovative services to neighbouring countries in West Africa, and many of its leading banks have an extensive presence throughout the region, although some retrenchment could well take place in the aftermath of the banking crisis in 2009.

In terms of cross-border M&As, one of the largest M&A deals worldwide in 2010 was the acquisition of the telecoms operations of Zain (Kuwait) in 15 African countries (not including those in North Africa) by the Indian mobile operator Bharti Airtel for US$10.7 billion. Although the deal itself did not bring in any net external finance to Africa at the time of acquisition simply because of changes in ownership, the new owner announced that it would invest US$1 billion to expand its operations in Africa in 2011, which will be partly financed through regional headquarters based in Nairobi, Kenya. This type of regional investment heralds a rising trend.