A 269% recovery in South Africa’s foreign direct investment (FDI) inflows in 2011, which climbed to $4.5-billion from a revised 2010 figure of $1.2-billion, was not sufficient to reverse the decline in overall inflows to Africa as a whole, which fell for the third consecutive year.

The recovery in Africa’s largest economy was also not enough to offset a significant decline in FDI flows to North Africa, which experienced material political transformation during the period.

In fact, the United Nations Conference on Trade and Development’s (Unctad’s) ‘Global Investment Trends Monitor’ shows that FDI inflows to Africa, which started declining in 2009, continued to fall last year, albeit at a reduced rate.

By contrast, global FDI inflows rose 17% year-on-year to $1.5-trillion, despite the prevailing economic and financial turmoil, with developing and transition economies accounting for half of that amount, with record inflows of $755-billion.

Overall African inflows contracted by 0.7% to $54.4-billion, from $54.7-billion in 2010.

The results were influenced by a fall-off in FDI flows to Libya, Tunisia and Egypt, with inflows to Egypt falling by more than 92%, from $6.4-billion in 2010 to only $500-million last year.

The report shows that Central Africa and East Africa also experienced decreases in inward investment flows. But West Africa and Southern Africa showed “robust” growth, with Nigeria reporting a 12% rise in FDI inflows, from $6.1-billion to $6.8-billion.

The South African recovery was underpinned by the $2.4-billion purchase of a majority interest in JSE-listed Massmart by retail giant Wal-Mart, of the US.

The deal was not large enough to feature on Unctad’s list of the 70 cross-border merger and acquisition (M&A) deals with a value greater than $3-billion. However, it supported a country-level turnaround from the shock 70% slump of 2010.

Nevertheless, South Africa’s 2011 performance was well below the country’s inflow peak of $9-billion achieved in 2008.

A number of commentators have also argued that South Africa’s performance should have been better, particularly in light of the strong commodity markets, which have supported investment flows in other resources-heavy economies.

Studies show that mining’s contribution to South Africa’s gross domestic product declined by 1% over the last decade, while it had climbed strongly in other resources-rich countries, including China, Chile, Russia, Indonesia, India, Colombia, Australia and Brazil.

Unctad estimated that FDI flows were likely to rise moderately in 2012, to around US$1.6-trillion.