Barriers and Opportunities for Enhancing Capital Flows

In the COMCEC Member Countries

Figure 1.7: Magnitude of FDI flows by range for COMCEC Member Countries within the

lower-middle income group, 2012

Source: UNCTAD World Investment Report 2013

The lower-middle income group, made up of Arab, African and Asian countries, is relatively

heterogeneous. Nonetheless, a number of trends can be observed with respect to specific

countries or sub-regions within this group:



Capital flows into SSA have been more buoyant than those into the Middle East and

North Africa (MENA) region. This is in part because SSA countries tend to be capital

importers running current account deficits, while many of the MENA countries are

capital exporters running large current account surpluses. Furthermore, SSA countries

are in greater relative need of FDI to help develop their commodity resources.



MENA capital flows continue to suffer from low investor confidence stemming from

the “transition” effect visible since 2011. MENA countries within this group – Egypt,

Morocco, Syria, Yemen – have suffered significantly from uncertainties around

domestic political developments. Private investment and confidence is being held back

by political instability, while upcoming constitutional changes are resulting in a “wait

and see” attitude among investors. Morocco remains promising among the MENA

countries in this income group, managing the process of transition well

and taking

steps to improve the investment climate and business environment. This has helped

Morocco to attract flows that might otherwise have gone to Tunisia or Algeria.

A political reform process was initiated in March 2011. See for example the IMF Deauville Partnership Ministerial Meeting

document, ‘Arab Countries in Transition: Economic Outlook and Key Challenges’, October 12, 2012

Interview with Margareta Drzeniek,

Global Competitiveness

, World Economic Forum, September 10 2013

LMIC (15)

FDI flows, 2012

Indonesia

$10-49bn

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Nigeria

>$3bn

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Uzbekistan

$1-4.9bn

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Egypt

$2-2.9bn

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Morocco

$2-2.9bn

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Sudan

$2-2.9bn

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Mauritania

$1-1.9bn

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Yemen

<$1bn

Cameroon

$0.5-0.9bn

Guyana

$0.1-0.9bn

Pakistan

$0.1-0.9bn

Cote d'Ivoire

$0.1-0.4bn

Djibouti

$0.1-0.4bn

Senegal

$0.1-0.4bn

Syria

n/a