With foreign direct investment (FDI) stocks of $18-billion, South Africa has emerged as the second-largest developing-country fixed investor in the rest of Africa, a new United Nations Conference on Trade and Development (Unctad) report shows.

Only Malaysia had bigger FDI stocks in 2011, with South African ranking ahead of both China and India. In addition, during 2012, outflows from South Africa rose to $4.4-billion, restoring the country’s status as the largest source of FDI in the rest of Africa.

The World Investment Report 2013 (WIR 2013) notes that South African companies were active in acquiring operations in industries such as mining, wholesale and healthcare during the year.

It also reveals that South Africa was the fifth-largest overall holder of FDI stock in Africa in 2011, with the majority of this outward stock attributed to reinvested earnings in the private nonbanking sector.

The largest share of South Africa’s outward FDI stock was in Mauritius, while a quarter of its stock was concentrated in Nigeria, Mozambique and Zimbabwe.

However, the report also shows that FDI inflows to South Africa fell 24% to $4.6-billion last year, having recovered to $5.8-billion 2011, from $1.2-billion in 2010. The decline was largely attributed to net divestments in the fourth quarter, as a foreign mining company offloaded its stake in a South Africa subsidiary.

But Industrial Development Corporation head of research and information Jorge Maia, who presented the WIR 2013 findings in Johannesburg, noted that South Africa’s 2012 FDI flows were above the precrisis average of $3.9-billion a year and involved more greenfield investments, particularly in the renewable-energy sector.

FDI flows, Maia said, represented 6.1% of overall fixed investment in South Africa in 2012 and 9.1% of Africa’s total inflows. It also lifted the country’s FDI inward stock to $139-billion in 2012, representing 35.6% of gross domestic product, compared with 9.9% in 1995.

Nevertheless, the fall was out of kilter with the rest of the continent, where FDI flows increased by 5% in 2012 to $50-billion, despite global FDI declining by 18% to $1.35-trillion.

In fact, Africa was the only region to show a rise in FDI flows last year, while still remaining a small part of the overall global investment picture. In addition, developing economies surpassed developed economies as FDI recipients for the first time, capturing 52% of flows – although the US remained the largest FDI recipient at $168-billion.

South Africa remained a top-five FDI recipient during the year, coming in third after Nigeria ($7-billion) and Mozambique, where FDI surged to $5.2-billion on the back of investments into natural gas.

However, the South African economy, which experienced widespread industrial-relations disruptions in 2012 in the mining, farming and transport sectors, slipped one spot, to 15, as a top prospective host country as ranked by 159 trans-national corporations.  The ranking is led by China, the US and India.

The WIR 2013 shows that investment in extractive industries remains the most important driver of African FDI to Africa, but manufacturing and services investment also rose.

Southern Africa presented a mixed picture, falling overall from $8.7-billion in 2011 to $5.4-billion, on the back of declines in South Africa and Angola. But inflows to Mozambique doubled.

North Africa showed signs of a revival after declines rooted in the area’s 2011 political turmoil – flows increased by 35% to $11.5-billion in 2012.

Investment flows to West Africa declined by 5% to $16.8-billion, the report reveals, while Central Africa saw its inflows rise to a record $10-billion, partly owing to natural-resources-related inflows into countries such as the Democratic Republic of Congo.

Inflows to the East African region expanded from $4.5-billion in 2011 to $6.3-billion last year, on the back of energy-related projects.

Meanwhile, FDI outflows from African countries almost tripled in 2012, to a record $14-billion, with outflows increasing across all African regions.

The report also shows that the bloc comprising Brazil, Russia, India, China and South Africa (Brics) is consolidating itself as a leading source of FDI among emerging countries. Flows from the five economies have increased from $7-billion in 2000 to $145-billion last year, accounting for 10% of the world total.

Brics companies, the reports states, have becoming increasingly active, including in Africa. In the ranks of top investors, China moved up from the sixth to the third position in 2012, after the US and Japan.

Unctad forecasts FDI in 2013 to remain close to levels achieved in 2012, with an upper range of $1.45-trillion. It expects that FDI flows could climb to $1.6-trillion in 2014 and to $1.8-trillion in 2015.