$36bn FDI inflow into Nigeria driven by cross-border M&As
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L-R: Daniel Franz Rencoret, global sales director Patrick Ayanski Ltd, Funmilayo Anyanbadejo, sole distributor West Africa and Marc Bormeis global sales manager at the media, manufacturer and customer forum organised by the company in Lagos.
The recent rise in Foreign Direct Investment in flow into Nigeria and other African countries which reached $36billion in 2007 is said to be driven by Cross- border Mergers and Acquisitions (M&As) and the boom in the global commodity markets.
The Cross-border M&As is mainly in the extraction and related service industries which remained a significant source of FDI, but new inbound M&A deals also took place in the banking industry.
Global foreign direct investment (FDI) inflows grew in 2007 to an estimated US$1.5 trillion, surpassing the previous record set in the year 2000, UNCTAD investment experts said today.
According to the United Nations Conference on Trade Development (UNCTAD), FDI continues to rise in all of three groups of economies — in developed countries, developing economies and in South-East Europe and the Commonwealth of Independent States (CIS).
Analysts say this rising trend of FDI largely reflects the high-growth propensities of transnational corporations (TNCs) and strong economic performance in many parts of the world.
According to UNCTAD, the increased corporate profits and an abundance of cash, boosted the value of the cross-border mergers and acquisitions (M&As) that constitute a large portion of FDI flows, “although the value of M&As in the latter half of 2007 declined.
“The financial and credit crisis that began in the latter half of 2007 has not affected the overall volume of FDI inflows. Even with a slowdown of the United States economy, the depreciation of the US dollar may have helped to maintain high levels of FDI flows into the country, in particular from countries with appreciating currencies, such as Europe and developing Asia .”
It would be recalled that FDI flows to developed countries in 2007 is said to have grown for the fourth consecutive year, reaching N117trilion ($1 trillion). Flows were particularly buoyant in the United Kingdom, France, and the Netherlands .
Analysts are of the view that if the increasing probability of a recession in the United States and uncertainties about global repercussions occurs, it may lead to a more cautious attitude by investors.
Meanwhile, UNCTAD said that despite some unfavourable economic projections for 2008 and potential tightening of rules for foreign investment in natural resources and related industries, high demand for natural resources around the world are likely to boost FDI in the extractive industries.
Global foreign direct investment (FDI) inflows grew in 2007 to an estimated US$1.5 trillion, surpassing the previous record set in the year 2000, UNCTAD investment experts said today.
According to the United Nations Conference on Trade Development (UNCTAD), FDI continues to rise in all of three groups of economies — in developed countries, developing economies and in South-East Europe and the Commonwealth of Independent States (CIS).
Analysts say this rising trend of FDI largely reflects the high-growth propensities of transnational corporations (TNCs) and strong economic performance in many parts of the world.
According to UNCTAD, the increased corporate profits and an abundance of cash, boosted the value of the cross-border mergers and acquisitions (M&As) that constitute a large portion of FDI flows, “although the value of M&As in the latter half of 2007 declined.
“The financial and credit crisis that began in the latter half of 2007 has not affected the overall volume of FDI inflows. Even with a slowdown of the United States economy, the depreciation of the US dollar may have helped to maintain high levels of FDI flows into the country, in particular from countries with appreciating currencies, such as Europe and developing Asia .”
It would be recalled that FDI flows to developed countries in 2007 is said to have grown for the fourth consecutive year, reaching N117trilion ($1 trillion). Flows were particularly buoyant in the United Kingdom, France, and the Netherlands .
Analysts are of the view that if the increasing probability of a recession in the United States and uncertainties about global repercussions occurs, it may lead to a more cautious attitude by investors.
Meanwhile, UNCTAD said that despite some unfavourable economic projections for 2008 and potential tightening of rules for foreign investment in natural resources and related industries, high demand for natural resources around the world are likely to boost FDI in the extractive industries.
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