The United Nations Conference on Trade and Development stated that in 2013, Africa attracted 56 billion US dollars of FDI inflows, approximately 3.8 per cent of the global FDI for the year.
“The increase from the prior year was largely driven by Southern Africa, with Mozambique the standout recipient at seven billion US dollars of FDI compared to a Gross Domestic Product (GDP) of only 14.7 billion US dollars,” said RisCura.
“Net portfolio flows have been much more volatile, and have been strongly linked to developed market monetary policy. Inflows in recent years have led to strong stock market performances in countries such as Ghana, Nigeria and Kenya, but have also played havoc with some currencies, most notably the South African rand.”
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RisCura, an advice, analysis and reporting provider, recently released its 2014 Bright Africa report in which it indicated that the main beneficiaries of FDI reported were Nigeria, Mozambique, South Africa and Ghana.
“Notwithstanding the relatively low levels of investment in global terms, there is some evidence that investors are beginning to pay more attention to African economies,” the company indicated.
Rory Ord, head of private equity at RisCura, said, “Local listed markets give good access to financials, telecoms and consumer staples in certain countries, while private equity allows stronger exposure to consumer discretionary as well as industrials and materials, healthcare and education.”
The upsurge in FDI has also supported GDP growth experienced over the past three years. South Africa, for example, recorded three-year average GDP growth of 24.2 billion dollars while Angola recorded growth of 7.1 billion dollars.
In the Western African region, Nigeria saw three-year average GDP growth of 87.5 billion dollars and Ghana saw growth of eight billion dollars.
Algeria and Egypt recorded three-year average GDP growth of 12.3 billion dollars and 19.5 billion dollars respectively.
“In 2000, Africa began the long process of catching up to global living standards and economic output. Evidence of this change can be seen in the continent’s share of global GDP, which has grown from 4.2 per cent in 2008 to 4.5 per cent in 2013,” Ord said.
“This may not seem like much, but increasing the global share of GDP requires countries to outperform global growth levels consistently over time. In Africa this has been achieved through sustained growth rates across the continent of more than six per cent per annum for ten years.”
The report further indicated that increased capital flows to Africa are financing strong growth and that Africa’s capital markets are developing and have shown excellent returns.