Foreign Direct Investment (FDI) inflows to the African continent continued to decline for the third consecutive year in 2011 due to ongoing unrest in Egypt and Libya, according to a report issued on Thursday by the United Nations Conference on Trade and Development (UNCTAD).
UNCTAD's World Investment Report 2012 indicates that FDI inflows to sub-Saharan Africa, meanwhile, managed to rise from $29 billion in 2010 to $37 billion in 2011 – close to its peak in 2008. South Africa's rebound, along with the ongoing rise in commodity prices, accentuated the recovery.
North Africa, however, which has traditionally accounted for one third of the continent's total FDI inflow, saw incoming investment halved to $7.69 billion in 2011. FDI to Egypt and Libya in particular – historically the region's two main recipients – was almost negligible last year due to political unrest.
On 27 June, Yasser Ali, spokesman for Egypt's newly-inaugurated President Mohamed Morsi, said the country was expected to see some $200 billion worth of foreign investment in "the coming period." Ali did not elaborate on the exact duration of the "period" in question.
Such a figure, however, does not appear realistic when set within the context of Egypt's past FDI figures, the size of its economy or the FDI inflows enjoyed by peer countries.
Meanwhile, FDI outflows from North Africa, the UNCTAD report indicates, also fell sharply in 2011 to $1.75 billion, compared with $4.85 billion the previous year. Such figures remain low when compared to their peak in 2008, when FDI outflows from North African countries reached as much as $8.75 billion.
The report further points out that the number of investor-state dispute settlement (ISDS) grew in 2011 – by at least 46 cases – to reach their highest levels ever. Egypt came in second in terms of new ISDS cases at four, outdone only by Venezuela and followed by Ecuador.
By the end of last year, the total number of known treaty-based cases had reached 450, according to the report. UNCTAD attributes the increase in cases to rising awareness about ISDS among investors.