An unexciting FDI story


Thursday, July 02, 2015 9:22AM / FBN Capital Research   

The largest economy in Africa was the fifth largest beneficiary of gross FDI inflows in 2014, having occupied the no three slot the previous year. This is the headline finding of the flagship publication in the field, UNCTAD’s World Investment Report 2014.


When we adjust the data to reflect FDI outflows, which amounted to US$1.6bn in Nigeria’s case, it has the fourth position on a net basis (and South Africa the fifth). We note in passing that the gross and net figures for Nigeria mirror those in the CBN’s quarterly Developments in the External Sector.


The weighting of FDI on a GDP basis remains poor in Nigeria, at 0.9% and 0.6% in gross and net terms respectively. The ratio was comfortably in double-digits in several of the East Asian success stories after the crash of 1997 and 1998.

Investment, of course, can also be domestic, and is increasingly so in Nigeria. The foreign variant probably still has the edge in terms of the introduction of technology and skills.

One of the most visible marks of FDI inflows in Nigeria is retail space. South Africa’s Shoprite takes a long-term view: it had seven operations at end-2013 and still has plans for a total of 700 in the country.

UNCTAD also publishes data on announced greenfield FDI on a regional basis. This is a bold undertaking since announcements are subject to revision and the numbers are not necessarily forward indicators of FDI inflows.

For Africa as a whole, there was a healthy increase from US$55.1bn to US$88.3bn in 2014. We highlight two details: that manufacturing accounted for US$28.8bn of the greenfield total, and that China was the third investor (after France and the US).

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