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SA is key investor to Africa, says Unctad
June 26, 2009
By Ethel Hazelhurst
South Africa is responsible for a big slice of investment in the rest of Africa, according to an economic development report released yesterday by the UN Conference on Trade and Development (Unctad).
South Africa has been rated in fourth place on the list of global investors between 2003 and 2007. It provided 6 percent of total foreign direct investment to the continent.
The report was presented by Janvier Nkurunziza, a member of the Unctad team responsible for the research. He said South Africa, which contributes almost a quarter of the continent's gross domestic product, is the biggest source of foreign direct investment within the continent. In 2007, it accounted for 70 percent of total intra-African flows.
By 2007, the country had an accumulated stock of investment worth nearly R120 billion in the rest of Africa. Its inbound stock of investment from the rest of the continent was worth about R82bn.
Africa has traditionally relied heavily on investment from outside the continent. The UK heads the list of global investors, providing more than 21 percent of the total between 2003 and 2007, followed by the US with 19 percent and 15 percent from France.
South Africa has diversified its investments geographically. In 2007 local companies invested nearly 34 percent of the total outward investment in east Africa, 32 percent in west Africa and 25 percent in South Africa's immediate neighbours.
However, more than 70 percent of regional investment in South Africa comes mainly in the form of portfolio investments (equities and bonds).
The report stressed the importance of intra-African investment during the current downturn because it "could help counteract the weakening flows from Europe and the US". The pace of intraregional investment picked up, from an average annual $2bn (R16bn) between 2002 and 2004 to $6bn in 2006.
Nkurunziza said data on investment was limited and sectoral information was particularly scarce. No African country other than South Africa keeps data on outward foreign direct investment stock and flows.
The report also deals with trade. Since the early 2000s, the proportion of intra-African merchandise trade has stabilised at about 10 percent of Africa's total trade with the world.
The share is constant because Africa's trade with the rest of the world increased much faster than regional trade. Intra-African trade rose an annual average 13.64 percent between 1999 to 2006, while trade with the US rose 27.57 percent and with China nearly 61 percent.
South Africa is the continent's top exporter to Africa, with more than 24 percent of total intra-regional exports.
But it only takes second place as an exporter to the rest of the world, with nearly 16 percent of the continent's total exports. Algeria, an oil exporter, heads the list with more than 17 percent.
Intra-African trade represents only a small share of the continent's total trade - because the big African exporters trade little with other African countries.
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