Barriers and Opportunities for Enhancing Capital Flows
In the COMCEC Member Countries
23
Low-Income Countries
Capital outflows from low-income countries, many of which are based in SSA, have been
relatively low in recent years. FDI from African countries as a whole fell in 2011 to an
estimated US$2.1bn, compared with US$5bn in 2010. Apart from declines in outflows from
Egypt and Libya, traditionally important outward investors of the region, the total was also
pulled down by major divestments among multinational corporations from South Africa,
another major outward investor.
A significant proportion of the capital outflows from SSA is illicit. For example, over the three
decades ending in 2009, real cumulative illicit outflows from SSA were more than double those
from North Africa.30 The per-capita loss of illicit capital from fuel-exporting countries over the
period 1980-2009 (US$1,631) was slightly more than three times the outflow per capita from
non-fuel-exporters (US$441). Heavily indebted poor countries lost US$480 per person through
illicit financial flows.
Lower-Middle Income Countries
With the exception of Indonesia, capital outflows in the lower-middle income group remain
limited in volume, displaying a somewhat volatile pattern over the past five years. Since 2011
both capital inflows and outflows have suffered a drop in countries such as Syria and Egypt,
with political crises still lingering. In Africa, resource-intensive and fast-growing economies
such as Nigeria display a marked imbalance between capital inflows and outflows, with inward
FDI in line with that of mid-sized developed economies and outflows at much lower levels. The
group outlier is Indonesia, with outward FDI close to US$5.5bn in 2012. Some Indonesian
businesses such as Salim and Lippo have played a role in driving the country’s outward FDI.
Although investment remains mostly regional, some firms have invested in more distant
emerging markets in Latin America (Raja Garuda Mas), Africa (Kalbe Farma), the Middle East
(Bakrie, Salim) and Central Asia (Bakrie, Salim).31
Upper-Middle Income Countries
The upper-middle income group is characterised by a number of prominent countries in terms
of their volume of capital outflows. Total outward FDI from East and South-east Asia has
increased modestly in the last year. Outflows from Malaysia have increased, in part as Malaysia
has emerged as a significant investor in SSA. Among North-South deals, Malaysia ranked
alongside South Africa and China in the top three investors until the 2004-06 period. The
ranking of countries for the period 2007-09 was similar, with Malaysia accounting for 10.6% of
all South-South deals – second among the so-called “South countries” investing in the South.32
(Russia ranked top with 11.6% of all South-South deals, and India third with 8.3%).
30 “Illicit Financial Flows and the problem of net resource transfers from Africa: 1980-2009”, African Development Bank and Global
Financial Integrity, 2013
31 M. Carney and M. Dielemann, “Indonesia’s missing multinationals: business groups and outward direct investment”, Bulletin of
Indonesian Economic Studies, 2011
3