The Middle East experienced an 8% drop in FDI projects in 2010 and Africa a decline of 11%. Capital investment in the Middle East fell by 45%, with 19% fewer jobs created, while capital investment into Africa fell by 13%, with job creation falling by 7%.
In 2008, the Middle East experienced a major boom in FDI across many sectors, most notably the real estate sector. FDI into the region has declined significantly in both 2009 and 2010. In 2010, 675 FDI projects were located in the Middle East with an estimated $44.21bn capital investment creating an estimated 76,795 jobs. This compares with an estimated $150bn capital investment in the Middle East in 2008 and $80bn in 2009.
The average project size into the Middle East and Africa has decline significantly. In 2008, the average FDI project into the region involved capital investment of $177.7m and the creation of 244 jobs. In 2010, the average project was less than half the size, with $65m investment and the creation of 114 jobs.
UAE leads but slips globally
The United Arab Emirates, Saudi Arabia and Qatar ranked as the top three destination countries for FDI into the Middle East in 2010, a repeat of the situation in 2009. However, the number of FDI projects into these countries in 2010 fell by 17%, 15% and 16%, respectively. The UAE attracted a total of 279 projects in 2010, more than twice the number of its nearest rival, Saudi Arabia. Total capital investment into the UAE stood at an estimated $10.43bn with the creation of an estimated 22,010 jobs. FDI into the UAE declined in both 2009 and 2010, but still remains above pre-2008 levels.
On a global scale, the UAE barely held onto a top 10 spot in the number of FDI projects attracted, falling from sixth place in 2009 to rank 10th in 2010. However, relative to the size of the country, UAE's figures for FDI still impress.
Good year for Iraq and Jordan
Although many Middle Eastern countries witnessed a decline in FDI in 2010, projects into Iraq increased by 175%, albeit from a very small starting point. Iraq climbed from the 10th leading destination country in the Middle East to fourth position in 2010. The country attracted 7% of FDI into the region in 2010, up from 2% in 2009.
Jordan also attracted growing levels of FDI, with the number of projects up 74% in 2010, ranking it as the fifth leading destination country in the Middle East.
Dubai leads city list
Dubai and Abu Dhabi in UAE and Doha in Qatar claimed the top three positions for most attractive cities for FDI in the Middle East in 2010, even with projects into these cities declining by 20%, 13% and 44%, respectively. Globally, Dubai ranked as the fourth leading city in the world.
Baghdad in Iraq was the seventh leading city in the Middle East as its FDI increased by 300% in 2010. Amman in Jordan also experienced one of the largest increases in FDI, with projects increasing by 89% in 2010 and the city climbing from 10th position to fifth in the top cities in the Middle East.
Challenging times for FDI in Africa
In 2008, Africa saw a substantial growth in FDI, but after the global recession and more risk-averse investment strategies, FDI in Africa declined in both 2009 and 2010. FDI projects into the continent declined by 11% in 2010, although FDI remains above pre-2008 figures. In 2010, a total of 583 FDI projects were established in Africa with an estimated $83bn investment creating an estimated 131,458 jobs.
Africa has attracted capital- and labour-intensive projects in 2010. The average project in 2010 was $143m (the largest capital per project of any world region) and created 225 jobs. The relatively large size of projects in Africa shows a concentration on large-scale natural resource, infrastructure and construction-related projects, with relatively fewer manufacturing, services or hi-tech projects, although in 2010 the composition of FDI has begun to shift.
South Africa and Egypt lead in Africa
South Africa and Egypt were the top two destination countries in Africa for FDI in 2010, attracting a combined 26% of FDI projects into the continent. South Africa attracted 89 FDI projects in 2010 with an estimated $5.79bn capital investment creating an estimated 16,108 jobs. The number of FDI projects into South Africa declined by 14% in 2010.
FDI projects into Egypt fell by 30% in 2010, with Egypt and South Africa witnessing two of the largest declines in FDI in Africa. Egypt attracted 89 projects in 2010 with an estimated $13.6bn capital investment creating an estimated 17,115 jobs.
Very few countries in Africa witnessed an increase in FDI in 2010. Tanzania and Mozambique were among the few countries that did, with FDI projects increasing by 109% and 50%, respectively.
Johannesburg in South Africa overtook Cairo in Egypt to become the leading destination city in Africa for FDI projects in 2010. Cairo experienced one of the sharpest declines in FDI in Africa, with projects down by 41% in 2010. Very few cities experienced a significant increase in FDI projects although Luanda in Angola had an increase of 71% in 2010, albeit from a very small base.
FDI from India increases
Western Europe is the leading investor in Africa, accounting for 43% of FDI projects in the continent in 2010 despite a 19% decline in the number of projects sourced from this region. FDI projects from Asia-Pacific into Africa increased by 11% in 2010, accounting for 18% of all FDI into Africa.
India grew in importance, with the number of FDI projects from Indian companies into Africa increasing by 74% in 2010, ranking India as the joint third leading source country with France. India’s investments were mainly in financial services and communications.