Nigeria’s Foreign Direct Investment (FDI) inflows fell from six billion dollars in 2009 to $2.3 billion  in 2010, a new UN report says.

The fall represents a 60.4 per cent decline. The latest UN Conference on Trade and Development (UNCTAD) Global Investment Trends Monitor (GITD) was released at the UN office in Geneva.

The report notes that inflows into Africa, which peaked in 2008, is on the decline, despite an increase in developing and transition economies, which rose by 10 per cent in 2010.

“Estimates show that FDI inflows in the continent fell by 14 per cent to $50 billion  in 2010, although there are significant regional variations,” the report stated.

According to the report, cross-border mergers and acquisitions, an increasingly important mode of entry into developing countries, increased in Nigeria from 0.2 per cent in 2009 to 0.4 in 2010.  “India’s Bhari Airtel’s acquisition of the African mobile phone networks, Zain Africa, for 10.7 billion dollars in 2010, was not reported as an addition to FDI flows into Africa or Nigeria, since it is only a change of ownership,” it noted.

Nigeria’s communications sector, which attracted $15 billion in the last nine years, is the second largest source for FDIs in the country, after the oil and gas sector. The UNCTAD report, which also highlighted decline in FDIs in South Africa, notes that developing and transition economies, for the first time, accounted for more than half of the global FDI inflows in 2010. The report showed that global inflows of FDI rose marginally by one per cent from $1.1 trillion dollars in 2009 to almost $1. 112 trillion.

“There was a strong rebound in FDI to developing Asian economies and Latin America, while Europe stood out as the region where flows fell the most sharply,” The report estimates that FDI flows to developing economies increased to $525 billion  in 2010 compared with $478 billion in 2009.

It mainly attributed the additional flows to a relatively fast economic recovery experienced by these countries and increasing South-South flows. However, it notes that the rise of FDI from developing Asia and Latin America to Africa was not yet enough to compensate for the decline of FDI from developed countries, which still accounted for the lion”s share of inward FDI flows to many African countries.

According to the report, FDI flows are expected to improve this year from $1.3trillion to $1.5 trillion, but a number of risk factors remained in place. Conversely, the report predicts that worldwide GDP growth, after the “recovery-boost” in 2010, would slow down. In addition, risks related to currency volatility, sovereign debt and investment protectionism could still derail the expected FDI upturn.

A strong global FDI recovery depends much on the steady economic and FDI recovery of the developed economies, the report says.