Courtesy of The Financial Times, an interesting analysis of foreign investment in Africa which notes that – despite all the press – the Brics are still underweight in global FDI relative to their economic might, so their contribution in Africa may have only just begun.  According to the report:

“…It’s become a hoary cliché that the Bric economies are leading a modern day “scramble for Africa” – and it’s a scramble that’s often frustratingly difficult to quantify.

But Standard Bank has waded through the mish-mash of data and emerged with a prediction: that over the next decade emerging economies will contribute 30 per cent of the new foreign investment coming into Africa. While the bulk of African FDI is still from the old economies, the momentum is all with the Brics. So is the drama and the buzz.

Last year emerging economies made up 21 per cent of fresh foreign direct investment (FDI) and that was up from 17 per cent in 2000.

The idea that the Brics are redrawing the economic landscape of the world’s poorest continent, as well as the rest of the planet, comes through in a report from economists at Standard Bank.

“South-South FDI has emerged,” is how they put it, and that’s helped advance Africa’s integration into the global economy.

Promisingly, since the turn of the century, Africa’s relative and absolute share of global FDI inflows has increased, [with the stock of existing investments] peaking last year at $514bn (or 2.8 per cent of global inward stock).

The bank is a South African outfit that doesn’t hide its intrinsic Afro-optimism. Plus, let’s not forget, it became a beneficiary of Chinese FDI when Industrial and Commercial Bank of China bought a 20 per cent stake in it for $5.6bn in 2007.

Most independent analysts would add that it can be infuriatingly difficult to do business in many parts of Africa, but agree with the broad gist of Standard Bank’s observations:

Africa’s frontier markets offer ripe opportunities to globally minded corporates intent on expanding into growing markets. A growing contributor to Africa’s quest for global integration and access has been the developing economies.

Unsurprisingly, there are many varied tales within the broad-brush narrative of the Brics-in-Africa, starting with differences in the amounts of capital involved, as shown in the chart below (which adds South Africa to the group).

China has led the way, striking a series of billion dollar minerals-for-infrastructure deals and often stirring controversy on the way. Standard Bank estimates the total value of Chinese FDI in Africa as $30bn-40bn.

China’s moves have helped to motivate others, notably India. New Delhi is backing private sector expansion into Africa and in June Bharti Airtel, the country’s largest mobile network, spent $10.7bn on buying most of the African assets of Zain of Kuwait. Even before that deal, Indian investments added up to $14bn-20bn.

Russia has the smallest presence in Africa, with FDI stock of $5bn, but Standard Bank says Africa fits neatly into its resource ambitions. That will bring it into competition with its peers, including Brazil.

The Latin American giant has $8bn-12bn of investments in Africa, focused in the Portuguese-speaking realm of Angola and Mozambique and led by multinationals such as Vale, the mining company, and Petrobras, the national oil company.

New Brics-to-Africa FDI actually dropped to $59bn last year from $72bn in 2008, in the context of the global economic funk, but that was the smallest decline of any continent.

Overall, the spread of Bric investment in Africa remains far from even. Most of the FDI stock is concentrated in South Africa, which has $125bn, and the countries of north Africa: Egypt has $66bn and Morocco $40bn. Elsewhere it’s oil that’s sucked the money in: $69bn in Nigeria, $19bn in Sudan, and $16bn in Angola.

With the effectiveness of western aid still open to debate, Africa as a whole has a lot to gain from Bric investment, says Standard Bank:

FDI is particularly relevant for Africa given the gaping hole between internal savings and the investment requirement across most markets on the continent.

Anyone who has been shaken up by Africa’s pot-holed roads, watched their computer die during a power cut, or tried to shower with no water, can attest to a lack of infrastructure investment.

The Brics are still underweight in global FDI relative to their economic might, so their contribution in Africa may have only just begun.