In its recently published annual report, the United Nations Conference on Trade and Development (UNCTAD) highlighted a significant decline in foreign direct investment (FDI) in Africa. While in 2021 the region recorded a record $80 billion in FDI, this figure fell to $45 billion in 2022.
This report entitled “Investments in the world” nevertheless reveals certain encouraging points. First, the number of new project announcements increased by 39%, reaching a total of 766. Africa can boast of hosting six of the 15 largest mega projects announced in 2022, the latter being defined such as projects worth more than $10 billion.
Among African countries, Egypt stands out with an increase in FDI reaching $11 billion, mainly due to an increase in cross-border sales of mergers and acquisitions. South Africa comes second with $9 billion in foreign investment, followed closely by Ethiopia with $3.7 billion.
However, not all African economies benefit from this positive trend. Nigeria recorded negative FDI flows of -$187 million due to equity divestments, while flows to Ghana fell by 39%. Importantly, the FDI deficit in Africa has increased from $2.5 trillion in 2015 to around $4 trillion a year, highlighting the need for measures to attract more foreign investment to the region. .
This decline in FDI in Africa poses many challenges for the continent. Foreign investment can play a key role in job creation, economic development and poverty reduction. It is therefore crucial to put in place policies and incentives to attract investors and foster a business-friendly environment.
The situation of FDI in Africa is a current subject which requires particular attention. It is essential to understand the factors that influence these numbers and find solutions to reverse the trend. Through effective economic policies, structural reforms and the promotion of political stability, African countries can seek to attract more foreign investment and boost their economic development.
It remains to be seen how the situation will evolve in the coming years and what measures will be taken to stimulate FDI in Africa. One thing is certain, the importance of foreign investment for the growth and development of the continent cannot be underestimated.. It is therefore incumbent on governments and economic actors to work together to create a favorable business climate and attract the investments necessary for Africa’s prosperity.