In its recently published annual report, the United Nations Conference on Trade and Development (UNCTAD) highlights a significant decline in foreign direct investment in Africa.
According to this report entitled “Global Investments”, the value of foreign direct investments in Africa has fallen significantly, from $80 billion in 2021 to just $45 billion in 2022. A drop of this magnitude is not can be ignored and raises many questions as to the reasons that caused it and the consequences that result from it.
Among the highlights of this report, we can note a 39% increase in the number of announcements of new projects in Africa, reaching a total of 766 projects announced. It is also interesting to note that six of the 15 largest mega projects announced in 2022 are in Africa.
However, despite these promising announcements, the foreign direct investment deficit in Africa continues to widen. Since 2015, this deficit has increased from $2.5 trillion to around $4 trillion per year, an alarming figure that highlights Africa’s difficulty in attracting and retaining foreign investment.
The report also highlights some disparities between African countries in terms of foreign investment. Egypt stands out by having more than doubled its foreign direct investment to $11 billion, driven mainly by cross-border M&A sales. In contrast, Nigeria saw a fall in FDI flows with equity disinvestments, while FDI flows to Ghana fell by 39%.
The list of ten African countries with the largest foreign investments highlights countries like Egypt, South Africa, Ethiopia, Senegal, Morocco, Democratic Republic of Congo, Ghana, Uganda , Tanzania and Zambia.
This significant drop in foreign direct investment in Africa is worrying because it slows down the region’s economic development and limits employment and growth opportunities. It is essential that African governments take steps to improve the business environment, strengthen investor confidence and foster a climate conducive to foreign investment.
The African region has enormous economic potential and attractive investment opportunities. It is therefore crucial to implement reforms and policies that stimulate investments and create a favorable business climate. Foreign investment can play a key role in Africa’s sustainable development, promoting economic diversification, job creation and poverty reduction.
It is therefore essential that African governments work closely with economic actors and investors to identify investment opportunities, facilitate administrative procedures, improve infrastructure and promote political and economic stability.
In conclusion, the decline in foreign direct investment in Africa is a worrying subject that requires particular attention. It is imperative that measures are taken to reverse this trend and encourage foreign investment in Africa. The region has enormous economic potential and it is important to create conditions conducive to its development. This requires close collaboration between African governments, investors and economic actors to create a favorable environment for investments and stimulate economic growth.