Asian investment in Africa hit record levels in 2006, reaching US$90 billion, but it was concentrated on the energy sector and greater diversity is needed, said a U.N. report published Tuesday. Singapore, India and Malaysia were the top Asian originators of foreign investment in Africa according to the report produced by the U.N. Conference on Trade and Development and the U.N. Development Program.
China was becoming a big player with trade increasing from US$11 billion in 2000 to US$56 billion in 2006. China’s FDI stock in Africa had reached US$1.6 billion in 2005, compared with US$3.5 billion from Singapore, US$2 billion from India, and US$1.9 billion from Malaysia.
Many foreign countries were investing more heavily in Africa in an attempt to secure future energy needs, said UNCTAD official Hafiz Mirza.
“For Africa to benefit the most from FDI one has to move away from simply FDI in this area and into other extractive industries, infrastructure and into manufacturing as well so that’s an area of concern,” Mirza added.
Africa was still not a major destination for Asian foreign investment, attracting just US$1.2 billion out of a total FDI of US$46 billion during 2002-2004.
The amount of investment by Asia was also small compared with traditional investors in Europe: Britain (US$6.5 billion), the U.S. (US$1.1 billion) and France (US$1 billion).
One benefit of Asian investment was that much of its was concentrated on “greenfield” projects, that is new factories rather than in mergers and acquisitions of existing industry, said the report.