São Paulo – Emerging nations that make up the Brics (Brazil, Russia, India, China and South Africa) have multiplied the foreign direct investment (FDI) they receive and make. Their bet on Africa has grown, but they still invest little in each other. That is what the “The rise of Brics FDI and Africa” report, disclosed on Monday (25) by the United Nations Conference on Trade and Development (Unctad) showed prior to the 5th Bircs summit, to take place in Durban, South Africa, on Tuesday (26) and Wednesday (27).
According to the study, which is a special edition of the Global Investment Trends Monitor (GITM), the volume of FDI that the Brics receive each year has tripled since 2000. It climbed from US$ 80 billion in 2000 to US$ 263 billion in 2012. In the period, participation of these nations as a destination for global direct investment grew from 6% in 2000 to 20% in 2012. Last year, China was the country in the group that received the greatest share of funds: 46%, followed by Brazil (25%), Russia (17%) and India (10%).
According to the Unctad study, participation of these nations grows not just in receipt of investment, but also as investors. In 2000, they invested US$ 7 billion in other countries, a share that rose to US$ 126 billion in 2012. In 2000, foreign investment made by Brics nations answered to 1% of the global total, and in 2012, they reached 9%.
The main form of investment by the Brics was through mergers and acquisitions. Between 2010 and 2012, investment made this way totalled US$ 105 billion. In 2011, the rich countries received 42% of the total disbursed by the Brics, with the European Union receiving 34% of the total. The Unctad report also shows that there is great participation of these nations in investment in neighbouring nations. China and Brazil are respectively responsible for 70% and 40 of FDI in their neighbouring nations.
Limited investment
On the other hand, the Unctad report shows that investment of the Brics among themselves is still limited, despite having grown from US$ 260 million in 2003 to US$ 28.6 billion in 2011. Their participation in investment received by the Brics rose from 0.1% in 2003 to 2.5% in 2011.
China, which had US$ 425 billion for FDI in 2011 spent just 2.2% of this total, or US$ 9.3 billion, in the countries of the group. Brazil invested US$ 514 million among the Brics and South Africa, US$ 15.4 billion, but of this total, US$ 12.7 billion went to China. South Africa was the country in the bloc that turned the largest share of its capital to the other Brics countries, 19.6%. India turned 3.2% to the countries in the group and Brazil and Russia, 0.3% each.
The same study also shows that the countries in the Brics sought opportunities in Africa. The volume they had to invest in the continent in 2012 reached US$ 42 billion, growth of 14% over the previous year. But the flow effectively sent to the countries of the region grew 25% and reached US$ 10 billion that year.
According to the study, the countries in the Brics prefer to turn their funds in Africa to greenfield projects. The main investment made in the region went to services and manufacturing. The primary sector received just 10% of the projects developed by these countries in 2012.
The Unctad study identified that each of the Brics has an investment strategy on the African continent. Brazil, for example, almost always uses public banks to support projects across the Atlantic. “The Brazilian Development Bank (BNDES) deserves special mention as its incentives and disbursements to Sub-Saharan Africa have strongly increased over the past decade. It has played a key role in the expansion of Brazilian businesses in the new African ethanol industry, in countries like Angola, Ghana and Mozambique, which became important players in the expansion of worldwide biofuel supply,” says the document.
The Unctad also refers to disbursements by the Banco do Brasil to companies that invest in Africa and loans by Bradesco and Caixa Econômica Federal for housing projects.
China invested US$ 16 billion in the African continent in 2011 and bets on countries like South Africa, Sudan, Zambia, Nigeria and Algeria. South Africa focuses its investment in the private sector. In 2011, the country invested US$ 18 billion and was the fourth main investor in Africa. The country’s funds went to Zimbabwe and Mozambique, among others.
Indian FDI in Africa in 2011 reached US$ 14 billion, with the purchase of a mobile telephony operator. The country invests in the Mauritius, but also in Ivory Coast, Senegal and Sudan. Russia, which invested US$ 1 billion in the continent in 2011 and has been expanding its presence in the region, has companies that operate in the production of aluminium and extraction of raw material in Guinea, Angola, Nigeria and South Africa.
Peru
On Friday, the Unctad disclosed that the institution’s 14th ministerial conference should take place in Peru in 2016. The event should include heads of state, government, ministers, non-governmental organisations and representatives of universities, to discuss tendencies and projects for global trade. The last edition of the event took place in Doha, Qatar, in 2012.
*Translated by Mark Ament
