By Meg Dallett
Earlier this year, I wrote about the lack of African foreign investment in Africa and how crucial intra-Africa FDI is for the continent’s long-term development. With the developing world’s highest rate of return on investment and plenty of room for new projects, Africa should be an obvious choice for African investments. But in 2008 UNCTAD reported that intra-African investment made up only about 13% of all investment in Africa.
That may be changing in 2009. Last week’s Financial Times featured an opinion piece by Asha-Rose Migiro, Deputy Secretary General of the United Nations, praising the rise of South-South investment and calling for even more cooperation within the developing world.
Investment between developing nations is not new – China’s interest in Africa is well-documented and investment between the countries of the Association of Southeast Asian Nations (ASEAN) is 30% of FDI. But Migiro’s editorial specifically pointed to African investment in Africa, especially in some of the world’s most vulnerable countries. South Africa now accounts for about half of all FDI in countries like Lesotho, Malawi, and the Democratic Republic of the Congo. These LDCs, often emerging from conflict, are less likely to receive investment from the developed world, making African investment there even more important.
The past few months have seen several notable instances of increasing intra-African cooperation: East African Community leaders signed a common market treaty on November 20, three African trading blocs are on the road to forming the continent’s largest free trade area, and just this week African countries staged a pan-continent walkout at the Copenhagen climate change talks to keep the Kyoto Protocol on the agenda. As Africa gains in economic and political clout and becomes a progressively better place to do business, it’s likely that inter-regional and South-South investment will be the next big area of African integration.
