Washington D.C. — Net private capital flows to the five leading emerging market economies on the African continent are projected to increase by almost $3 billion this year, according to the leading organization of global financial institutions.

The Washington-based International Institute of Finance forecasts that net private capital flows to South Africa, Algeria, Egypt, Morocco and Tunisia will total $11.6 billion this year, up from $8.7 billion in 1999. The Institute, a global organization of the 300 largest transnational financial institutions, measures capital flows to key emerging market economies and makes forecasts twice a year.

South Africa remains a primary destination for foreign investments and the IIF projects that net portfolio equity investment in the Johannesburg Stock Exchange alone will total between $3.5 and $4 billion. Total net direct investment flows to the five economies will be $2.9 billion and non-bank private credit flows will total $4.5 billion.

Private capital flows to Africa are heavily weighed toward portfolio investment and loans, with only 25 percent of capital flows in 2000 projected to result from direct investment in plants and equipment on the continent. In contrast, direct investment makes up 62 percent of project capital flows to all emerging markets, according to the IIF.

The flow of private capital to Africa remains a very small proportion of the estimated $190 billion in net private capital flows to emerging markets projected for the year 2000. The IIF report on Capital Flows to Emerging Market Economies is available on their web site at www.iif.com.