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Global crisis ends six-year FDI boom in Africa, report finds

16 September 2009

The contents of this press release and the related Report must not be quoted or
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media before 17 September 2009,17:00 [GMT]
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Geneva, 17 September 2009 - As the financial and economic crisis continues to spread across the world, Africa, where foreign direct investment (FDI) flows peaked in 2008 after six years of uninterrupted growth, will likely see a fall in inflows in 2009, UNCTAD´s annual review of investment trends reports.

The World Investment Report 2009 , subtitled Transnational Corporations, Agricultural Production and Development(1), was released today. The study reveals that FDI inflows to Africa reached a record high of US$88 billion in 2008. However, based on preliminary data, in the first quarter of 2009 they plummeted by roughly 67% year-on-year (table 1).

FDI flows to the continent continued to be highly concentrated in only a few countries during 2008, marked by particularly strong growth in flows to West Africa. Countries such as Ghana and Guinea saw their annual inflows more than double, to well above $1 billion each. In Southern Africa, the increase in inward FDI was almost entirely due to the strong performance of Angola and South Africa. Central Africa and East Africa also posted growth in inflows, but at a much slower pace. Bucking this upward trend, in North Africa there were declines in inflows to Egypt (even after the $15 billion purchase of OCI Cement Group by Lafarge SA), the Libyan Arab Jamahiriya and Morocco.

The drastic fall in FDI to the continent in the first quarter of 2009 has important ramifications for development activities there, as FDI is a major contributor to gross fixed capital formation: its share was 29% in 2008. Furthermore, FDI inflows to Africa´s 33 least developed countries (LDCs), which peaked in 2008 after eight consecutive years of growth, are also at risk of falling. This is due to a crisis-induced lull in the global demand for commodities, which is a major attraction for FDI in these economies.

FDI outflows from the continent, which make up only 3% of outflows from developing countries, are in decline. They recorded a 12% fall, from US$10.6 billion in 2007 to $9.3 billion in 2008, mainly due to divestments by South African transnational corporations (TNCs). This is also reflected in a 17% decline in the value of cross-border mergers and acquisitions (M&As) undertaken by African TNCs. However, despite the overall decline, there was a significant rise in the value of cross-border M&A purchases by African TNCs in the financial services sector. Data for the first half of 2009 suggest there will be a further slowdown in overall M&A activity on the continent.

The prospects for FDI in Africa are intimately tied to the revival of global markets. While China has increasingly become an important investor there, developed countries -especially the United States and European Union countries - remain crucial markets and sources of capital. Responses to UNCTAD´s World Investment Prospects Survey 2009-2011 indicate that, compared to the previous year´s survey, TNCs the world over are planning an increase in both the number and value of investments in Africa by 2011.

The World Investment Report and its database are available online at and

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Tables and figures

Table 1. FDI flows of selected countries in Africa, 2008-2009, by quarter (Millions of dollars)

Table 1. FDI flows of selected countries in Africa, 2008-2009, by quarter
(Millions of dollars)
Source: UNCTAD, World Investment Report 2009: Transnational Corporations, Agricultural Production and Development, table II.3


1.The World Investment Report 2009: Transnational Corporations, Agricultural Production and Development (WIR09) (Sales No. E.09.II.D.15, ISBN: 978-92-1-112775-1) may be obtained from United Nations Sales Offices at the below-mentioned addresses or from United Nations sales agents in many countries. Price: US$ 95 (50% discount for residents in developing countries and a 75% discount for residents in least developed countries). This includes the book and the CD-ROM. Customers who would like to buy the book or the CD-ROM separately, or obtain quotations for large quantities, should enquire from the sales offices. Residents of countries in Europe, Africa and West Asia may send orders or inquiries to: United Nations Publication/Sales Section, Palais des Nations, CH-1211 Geneva 10, fax: +41 22 917 0027, e-mail:; and those from the Americas and East Asia, to: United Nations Publications, Two UN Plaza, DC2-853, New York, N.Y. 10017, U.S.A., telephone: 1 212 963 8302 or 1 800 253 9646, fax: 1 212 963 3489, e-mail: Internet:

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