South-South FDI Trends and African TNCs - Prof Kevin Ibeh

1. South-South FDI Trends and African TNCs - Prof Kevin Ibeh Outline major S-S FDI trends globallymain FDI trends in Africa summary findings on African TNCs

2. ‘South’ OFDI Trends • OFDI from the South reached new highs in 2010 & 11 – 31& 26% of total global OFDI, up from 16% in 07 • South, East and SE Asia OFDI continue on upward path • Transition economies OFDI also trending upward • West Asia OFDI rose in 2011, after a dip in 2010 • L. America and the Caribbean grew 2010 but fell 2011 • Large State-owned TNCs remain vibrant OFDI players • The above reflects strong economic growth/financial resources, increasing regional integration &investment policy liberalization • But are also motivated by the need to acquire resources, secure markets and strategic assets

3. South-South FDI Trends • Southern FDI directed at other DC&T-economies remain significant (typically accounting for a third of inflows) • These can be: • Intra-regional • 70% of M&A, GFI projects from the South in 2010 went to other economies within their own regions (TNCs from T-economies, W. Asia & Africa offer good examples) • Inter-regional • Developing Asian TNCs accounted for 60% of total FDI to LAAC in 2010 • The BRIC have vast FDI footprints across Africa

4. Africa’s OFDI Trends • Though insignificant in global or even S-S terms, Africa’s OFDI stock quadrupled in 9yrs, from $29bn in ‘01 to $122bn in ‘10. • South Africa is by far the largest contributor (67% of Africa’s OFDI in 2010, down from 75% in ‘07), but others have contributed as well. Africa’s OFDI (and TNCs) originate from all the sub-regions, but mainly from economies that are growing. • African TNCs are far from insignificant and some have expanded very rapidly in recent years. The largest ones come from the extractive, construction & telecom sectors, but financial services account for the highest proportion • African TNCs seem to be driven mainly by market seeking factors. • Resource/ knowledge seeking motives are also relevant.

5. African TNCs as engine of Development • African TNCs tend to invest mainly in other African countries, including the conflict affected and fragile states, and are often among the few sources of investments in these largely overlooked African economies. OFDI in other ‘Southern’ and advanced economies are also observed albeit less frequently • African TNCs are creating jobs & making strategic investments across Africa, and some are now being courted by African governments seeking to attract investments • African TNCs are role models and are attracting healthy rivalry from other firms. They could transform private sector development in Africa • African TNCs are contributing to the integration of African markets • African TNCs are affected by the persisting global economic crisis, but most seem to be holding up well

6. Selected African TNCs

7. Selected African TNCs 2