Middle East and Africa FDI growth affected by Arab Spring

Although the number of FDI projects in the Middle East and Africa grew by 16% in 2011, capital investment was down slightly and job creation only showed a slight rise.

The political turmoil of 2011 led to some dramatic changes in the volume of FDI in the countries most affected by the Arab Spring uprisings. The number of FDI projects in Libya and Yemen declined by 80%, in Egypt by 29%, in Syria by 26% and in Tunisia the number of FDI projects fell by 14%. Despite the political upheaval in north Africa, Africa as a whole was the growth hotspot in 2011, with a 24% increase in FDI projects recorded.

The Middle East and Africa (MEA) attracted a total of 1530 projects, according to a report released by fDi Intelligence. Capital investment was down slightly by 1% and job creation up by 3%. The top 10 countries for FDI attracted 64% of projects and capital investment, and 54% of jobs created.

South Africa performed particularly impressively, with a 57% increase in project numbers, 87% growth in capital investment, and a 28% rise in jobs created. The United Arab  Emirates attracted the highest number of projects, while Saudi Arabia attracted the most capital investment, which grew by 40% in 2011 to just over $14bn. However, this is still far below the $42bn in capital investment recorded in Saudi Arabia in 2008.

UAE-based companies remained most active in FDI overseas, although their outwards capital investment declined by 43%. This was largely due to continued decline in real estate FDI, with UAE companies investing in 57% less real estate projects in 2011 than 2010.

Coal, oil and natural gas lead the way for FDI in MEA

Given the vast natural resources of the MEA region, the combined coal, oil and natural gas sector was the leading category for FDI, with an estimated $35bn capital investment. The second leading sector in 2011 was the metals and minerals sector, with $27bn of investment, a 67% increase on 2010. In terms of project numbers, financial and business services was the top sector, accounting for 33% of all projects recorded in the MEA region.

A mixed global picture

The FDI results for MEA countries are set against a mixed global picture – 2011 was a challenging year for the global FDI market. Even though companies continued to be attracted to the investment opportunities in Africa and Latin America, natural disasters in Asia-Pacific and economic and political instability in Europe, north Africa and the Middle East led many companies to put on hold their FDI plans, leading to a sharp decline in FDI in many countries.

Nevertheless, against the backdrop of another tumultuous year for the world economy, foreign investors have remained cautiously optimistic with slow but solid growth in FDI. The global number of FDI projects increased by 5.6% in 2011, faster than the 3% increase in 2010. 

 -ends-

For further information please contact Dino Ribeiro, dino.ribeiro@ft.com or +44 (0)20 7873 3964. 

Download the full fDi Report 2012 at http://www.fdiintelligence.com/fDiReport.

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Notes to editors

Referencing – please state the source as fDi Intelligence from The Financial Times Ltd.

About the fDi Report 2012

The fDi Report 2012 is published by fDi Intelligence, part of The Financial Times Limited.  It draws on data from the fDi Markets database which tracks greenfield investment projects. It does not include Mergers & Acquisitions (M&A) or other equity-based or non-equity investments. Only new investment projects and significant expansions of existing projects are included. fDi Markets is the most authoritative source of intelligence on real investment in the global economy and the only source of greenfield investment data that covers all countries and industries worldwide. Retail projects have been excluded from this analysis but are tracked by fDi Markets.

The data presented includes FDI projects that have either been announced or opened by a company. The data on capital investment and job creation is based on the total investment the company is making at the time of the project announcement or opening. As companies can raise capital locally, phase their investment over a period of time, and can channel their investment through different countries for tax efficiency the data used in this report is different to the official data on FDI flows. The data from fDi Markets is more accurate and a real time indicator of the real investment companies are making in their overseas subsidiaries.

The data shown includes estimates for capital investment and job creation derived from algorithms (patent pending) when a company does not release the information. The World Bank, UNCTAD, Economist Intelligence Unit and over 100 governments around the world as well as major corporations use our data as the primarily source of intelligence on greenfield investment trends. 

About fDi Intelligence

• fDi Intelligence, a division of The Financial Times Ltd, is the largest FDI centre of excellence globally. Specialising in all areas relating to foreign direct investment and investment promotion, the full suite of services includes: location advertising to generate brand awareness; industry-leading intelligence tools to develop FDI strategies and identify potential investors; and tailored FDI events and investor roundtables to meet target companies and generate business leads.

• Products within the portfolio include fDi Markets, a database tracking crossborder greenfield investment on a real-time basis; fDi Benchmark, a database which benchmarks global locations on their attractiveness to foreign investors; and fDi Magazine and its website fDiIntelligence.com.

About The Financial Times

The Financial Times, one of the world’s leading business news organisations, is recognised internationally for its authority, integrity and accuracy. Providing essential news, comment, data and analysis for the global business community, the FT has a combined paid print and digital circulation of 604,856 (Deloitte assured, 3 October 2011 to 1 January 2012) and a combined print and online average daily readership of 2.2 million people worldwide (PwC assured, November 2011). FT.com has more than 4.5 million registered users and 285,475 paying digital subscribers. The newspaper, printed at 22 print sites across the globe, has a global print circulation of 316,493 (ABC, March 2012).