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FOREIGN INVESTMENT
Despite world turmoil, investment into Africa was ‘stable’ in 2023
By our African Marketing Confederation News Team | 2024
Foreign direct investment into the world’s developing economies dropped overall last year, says UN agency. But Africa stood its ground.
Foreign direct investment into Africa stayed flat at US$48–billion in 2022 and 2023, meaning the continent fared slightly better than developing economies as a whole, which recorded an overall drop of 9%.
Image by SK from Pixabay
This is according to information released last week by UNCTAD, the United Nation’s trade and development agency.
Developing countries in Asia felt the brunt of the decline, registering a 12% drop, while flows to Africa, Latin America and the Caribbean “remained more or less stable”, the agency states.
Overall, foreign direct investment flow into Africa decreased by 1%, although sub-Saharan Africa fared better than North Africa. The latter accounted for only $12-billion of the total inflow of $48-billion, meaning $36-billion went to SSA countries.
“The [African] region saw an increase in greenfield project announcements, particularly in Morocco, Kenya and Nigeria,” UNCTAD reports.
“However, a significant one-third reduction in project finance deals – higher than the global average – raises concerns for the future of infrastructure financing on the continent.”
A ‘greenfield project’ is when a parent company starts a venture in a foreign country by constructing new operational facilities from the ground up.
Developing economies around the world
Looking at developing economies around the world, UNCTAD says the decrease in FDI to these countries and regions last year occurred in a global context of weak investment and economic uncertainty.
India, for example, saw a 47% drop in FDI inflows. However, this was mitigated to some extent by India remaining among the top five global destinations for greenfield projects.
China also reported a rare 6% decrease in FDI inflows. But, similarly, it saw 8% growth in new greenfield project announcements.
“FDI flows to members of the Association of Southeast Asian Nations (ASEAN), normally an engine of FDI growth, declined by 16%,” UNCTAD reports.
“Yet the [ASEAN] group remained attractive for manufacturing investments, with a remarkable 37% increase in greenfield project announcements in nations like Vietnam, Thailand, Indonesia, Malaysia, the Philippines and Cambodia.”
In summary, while many Africans are concerned about how foreign investors view the continent, it fared better than most other developing regions in attracting investment in 2023. A reason for cautious optimism in 2024?
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