Foreign direct investment (FDI) inflows to Africa fell by 3% last year to an estimated $55bn, largely accounted for by a decrease of FDI into North Africa, according to the UNCTAD’s Global Investment Trends Monitor.

The United Nations Conference on Trade and Development (UNCTAD) report said that FDI into North Africa declined by 17% to $12.5bn, with continued civil unrest in Libya dragging down the region's potential as an FDI host.

“FDI into Africa was buoyed by increased inflows to Mozambique driven by its potential as one of the world’s largest liquefied natural gas exporters,” UNCTAD said.

Notwithstanding strong inflows to Mozambique, FDI into Sub-Saharan Africa remained flat.

Christie Viljoen, analyst at NKC Independent Economists, said that Africa has increasingly been able to attract foreign investment into a diversified range of sectors.

Viljoen said that commodity-driven investment remains exceedingly important for the continent, and has seen countries such as Mozambique receiving the highest level of net FDI on the continent in 2013, as its enormous gas finds attracted interest.

“Tanzania too has been attracting significant investment in recent years owing to gas finds there, with oil finds in turn leading to increased investment in other East African countries such as Kenya and Uganda,” she said.

“The reality is that the sharp drop in global oil prices during H2 of 2014 and the resulting decrease in medium-term oil price projections have reduced the incentive for international oil companies to explore for oil. While some projects will undoubtedly still be profitable at current oil prices, others will not. Many international oil companies have already announced that they would reduce capital expenditure in 2015. A deceleration in China and only slow expansion in the euro zone will also impact FDI into Africa during 2015,” she added.

According to UNCTAD, Africa saw cross-border mergers and acquisitions (M&A) sales increase by 41% to $5.4bn, as investors looked to tap into Africa’s growing consumer markets.

UNCTAD said that private equity firms and Middle East investors also played a role.

“In Nigeria, significant cross-border M&A growth to $1.3bn, especially into consumer-orientated sectors, helped counterbalance the decline in FDI to other sectors, stemming the level at $4.9bn,” said UNCTAD.

UNCTAD added that trends in global FDI flows are uncertain for 2015.

“The fragility of the world economy, with growth tempered by hesitant consumer demand, volatility in currency markets and geopolitical instability will act as a deterrent for investors. The decline in commodity prices will also lower investments in the oil and gas and other commodity industries.”