Insurgencies dip investment in Nigeria by 21%, UN says

A new report by the United Nations Conference on Trade and Investment has shown clearly the effects of the insurgencies in both the Niger Delta and Northern Nigeria by militants groups, with foreign direct investment to Nigeria dipping by 21 per cent last year.

Though Africa remained a relatively strong destination for foreign investors in 2012, with the continent recording a 5.5% increase in investment to $50billion, Nigeria bucked the trend. And it has it internal crisis to blame.

Inflows to Nigeria declined by 21 per cent to $7.0 billion, from about $9billion in 2011, accounting for much of the diminished flows to the West African region.

The UNCTAD World Investment Report 2013, subtitled Global Value Chains: Investment and Trade for Development, which was released last night put the investment decline to West Africa at 5 %, standing at $16.8 billion. Investment to Ghana was however stable at $3.3 billion.

Mining interests in Mauritania got an inflow of $1.2 billion.

The region of North Africa is beginning to see signs of a revival in cross-border investment activities, after declines rooted in the area’s political turmoil in 2011. FDI flows to North Africa increased by 35 per cent to $11.5 billion in 2012, the World Investment Report notes. Much of this increase was accounted for by a turnaround in Egypt, where inflows climbed from a net divestment of $0.5 billion in 2011 to a positive $2.8 billion in 2012. The report notes that the 2012 figure is still much lower than the levels reached in Egypt before 2011.

Central Africa saw its inflows rise to $10 billion, a record high, maintaining a trend of increasing FDI since 2010. Natural resources continue to attract investment from mining transnational corporations (TNCs). For example, significant FDI was targeted at the expansion of the copper-cobalt Tenke Fungurume mine (Democratic Republic of the Congo).

FDI flows to Southern Africa fell sharply, however, from $8.7 billion in 2011 to $5.4 billion in 2012, even as some countries saw substantial increases. Inflows to Mozambique, for example, doubled to $5.2 billion, attracted by the country’s huge offshore gas deposits. Meanwhile, Angola registered a third successive year of decline in FDI. Investment to that country fell by $6.9 billion. Inflows to South Africa, which have tended to fluctuate greatly in recent years, dropped by 24 per cent in 2012, to $4.6 billion. By contrast, FDI outflows from South Africa rebounded sharply to $4.4 billion, returning the country to the position of largest source country of FDI in Africa. South African companies were active in acquiring operations in industries such as mining, wholesale, and healthcare during 2012.

East Africa also saw its investment dollars increase to $6.3 billion last year from $4.6 billion in 2011, thanks to new oil and gas developments in Uganda and Tanzania.

“Africa is the one continent in the report this year that still had increased FDI,” said Philip Cobbina, a lecturer at the Ghana Institute of Management and Public Administration, referring to foreign direct investment.

Foreign investment dropped to $1.35 trillion worldwide compared to $1.65 trillion in 2011, with spending hit by continued investor uncertainty over the world economy’s recovery since the 2008 financial crisis, UNCTAD reports.

For the first time, the developing world overtook developed countries when it comes to foreign investment, bringing in 52 percent of foreign investment worldwide.

“Foreign direct investment has contributed to the development of nations in the developing world and will continue to play an important role,” Ghana’s Deputy Minister of Trade and Industry Nii Lantey Vanderpuije said at the launch of the report in Ghana’s capital Accra.

Africa is home to some of the world’s fastest growing economies, many of which are new democracies bouncing back from years of war, military rule or economic mismanagement.

The International Monetary Fund announced in April that it expects the continent’s economies to grow at 5.6 percent in 2013, led by rapidly growing economies like Mozambique and Nigeria.

Analysts however warn that such growth has in some cases not equated with significant development and poverty reduction.

Countries like Ghana — considered a success story in west Africa — have seen their economies boosted by new discoveries of oil, which buoyed investor interest and helped lead to GDP growth of 7.9 percent in 2012.