Barriers and Opportunities for Enhancing Capital Flows
In the COMCEC Member Countries
18
 Capital flows beyond FDI have become increasingly significant for the more-developed
countries within SSA, such as Nigeria. The proportion of FDI to total private capital
flows into SSA declined to 75% in 2011, from almost 100% in 2001. Furthermore,
according to IIF data, portfolio inflows to Nigeria increased to US$11bn in the first
three quarters of 2012, from US$3.8bn in the same period the year before.20 Nigeria
has good access to international debt markets and its stock market features in frontier
market investment funds, which have been attracting growing interest in the past two
years.
Upper-Middle Income Countries (UMICs)21
Similarly to the lower-middle income group, the upper-middle income group is a highly
heterogeneous set of countries with widely differing characteristics with respect to political
stability, natural resource endowment and macroeconomic and structural policies. However,
some countries within this group share a number of common characteristics with respect to
their capital flow situation, while others are emerging as success stories in attracting high
levels of capital inflows. A number of trends are visible among countries in the upper-middle
income group.
 Capital flows are subdued in the MENA countries in the upper-middle income group as
they face spillover effects from unstable neighbours. These countries – Algeria, Iran,
Iraq, Jordan, Lebanon, Libya and Tunisia – experienced weak growth in 2012 amid
continued policy uncertainty, regional tensions, and other factors; they continue to
face serious short-term risks. Lebanon and Tunisia have performed best at attracting
capital inflows in 2013 (approximately US$5bn-6bn), although both have been
dragged down by the Syria crisis and security concerns.
 Turkey is the leading COMCEC country in terms of capital inflows. According to EIU
data, capital inflows to Turkey were over US$95bn in 2012, accounting for 45% of total
capital inflows to the group. However FDI inflows to Turkey fell by 23% to $12.4bn in
2012, far below the $22bn recorded in 2007.22 This is partly attributable to prolonged
fiscal tightening in the EU, Turkey’s largest market, which has dampened export-led
FDI.23
20 “The changing nature of private capital flows to Sub-Saharan Africa”, Shockwatch Bulletin, Overseas Development Institute,
March 2013
21 Albania, Algeria, Azerbaijan, Gabon, Islamic Republic of Iran, Iraq, Jordan, Kazakhstan, Lebanon, Libya, Malaysia, Maldives,
Suriname, Tunisia, Turkey, Turkmenistan
22 World Investment Report 2013, UNCTAD
23 “Capital flows to emerging market economies”, Research Note, Institute of International Finance (IIF), June 2013