Nigeria and South Africa lose out in Foreign Direct Investment in 2012

A United Nations report reveals that Foreign Direct Investment into the economies of the African Giants; Nigeria and South Africa plummeted despite the high record in Africa in 2012 which was among the two continents to witness such in the year. Year-on-year rise in FDI inflows was witnessed by South America; it which grew 12 percent, though flows to the Latin America and Caribbean region as a whole declined.

Reuters report that while global FDI fell by 18 percent last year, Africa bucked the trend with inflows increasing 5 percent to $50 billion, as countries like Mozambique, Tanzania and Uganda reaped the benefits of new discoveries of oil and gas, according to the 2013 World Investment Report published by the United Nations Conference on Trade and Development.

Although West Africa had the biggest share of investment, flows to the region declined by 5 percent to $16.8 billion largely due to decreased investment in the continent's top oil producer Nigeria. Its FDI inflows fell from $8.9 billion in 2011 to $7 billion last year due to political insecurity and a weak global economy, UNCTAD said.

FDI flows to South Africa slumped 24 percent to $4.6 billion in 2012, largely due to a foreign mining company offloading its stake in a South African subsidiary, the report said. The case of Nigeria is complex because it is fighting an insurgency in the north which is drastically affecting investors confidence.

However, inflows to Mozambique, where companies like Brazil's Vale and London-listed Rio Tinto are developing huge offshore gas and coal deposits, doubled to $5.2 billion. FDI to central Africa surged 23 percent to a record $10 billion, while in east Africa recently discovered gas reserves in Tanzania and oil fields in Uganda resulted in a 40 percent jump to $6.3 billion.

The report also found that African countries, led by South Africa and Angola are stepping up their investment overseas, with FDI outflows from the continent nearly tripling from $5 billion in 2011 to $14 billion last year.