India and China are emerging as significant sources of foreign direct investment in Africa even as the overall percentage of FDI from Asian countries targeted towards the continent remains low, the United Nations has said.

However, the world body was optimistic that Africa would see increasing amount of FDI from Asia in coming years, provided the African countries pursue proactive policies to attract investments in infrastructure and industries.

A UNCTAD-UNDP study estimates that outward FDI from developing Asian economies reached a record $90 billion last year, but Africa could claim only a small percentage.

FDI is a significant source of external finance and a means of integrating into the global marketplace, the study said, adding so far Africa has been left out of this process.

This may be attributed to small market size, poor infrastructure, weak regulatory framework, debt problems, and in some cases, political instability, it said.

But over the past decade, however, there has been considerable progress with reforms in several African economies, it noted.

Africa, it said, has the potential to become an important investment location for Asian companies, in part because of the complementary nature of economic development between Asian and African countries.

Traditionally, FDI flows from developing Asia to Africa were mainly from the Asian newly industrialising economies -- Hong Kong, South Korea, Singapore and Taiwan.

The study said investment in Africa has become a strategic priority in the international economic cooperation efforts of some Asian countries, including Malaysia and China.

It pointed out that the recent rapid growth of Chinese FDI in Africa is partly the result of joint efforts by the Chinese and African governments, including initiatives adopted in Beijing at the Forum on China-Africa Cooperation held on November 5 and 6.

The rapid economic growth in Asia, it said, can be expected to lead to increased Asian investments in Africa in both natural resources and manufacturing.

In particular, the rapid industrial upgrading taking place in Asia provides ample opportunities for Africa to attract efficiency-seeking and export-oriented FDI from Asian economies.

But appropriate policies at both national and international levels are crucial for turning this potential into reality, it said. To attract Asian investments, the study suggested African nations to adopt proactive policies to spur FDI that leads to broad-based growth, enhance productive capacities between two regions and increase 'backward' linkages between foreign affiliates and domestic firms, especially small and medium-sized enterprises.