News: India, China top Asian FDI list in Africa

(PTI 28/03/2007) New York - India and China are emerging as significant sources of foreign direct investment (FDI) in Africa even as the overall percentage of FDI from Asian countries targeted towards the continent remains low, the United Nations has said.

However, the world body was optimistic that Africa would see increasing amount of FDI from Asia in coming years, provided the African countries pursue proactive policies to attract investments in infrastructure and industries.

A UNCTAD-UNDP study estimates that outward FDI from developing Asian economies reached a record USD 90 billion last year, but Africa could claim only a small percentage.

FDI is a significant source of external finance and a means of integrating into the global marketplace, the study said, adding so far Africa has been left out of this process. This may be attributed to small market size, poor infrastructure, weak regulatory framework, debt problems, and in some cases, political instability, it said. But over the past decade, however, there has been considerable progress with reforms in several African economies, it noted.

Africa, it said, has the potential to become an important investment location for Asian companies, in part because of the complementary nature of economic development between Asian and African countries. Traditionally, FDI flows from developing Asia to Africa were mainly from the Asian newly industrialising economies -- Hong Kong, South Korea, Singapore and Taiwan.