African countries

FDI in Africa Drops by 18% in 2020, Says UNCTAD

Foreign Direct Investments last year fell by 18% in Africa, compared to a year before.

In a report issued on Monday, the UN Conference on Trade and Development (UNCTAD) said the bad performance was due to a sharp decline (-63% YoY) in Greenfield investments and international financing projects (-40% YoY).

However, the report said, the impact is unevenly felt across the continent. The largest decline was observed in North Africa, with a 32% YoY drop in FDI. Overall, the region captured only $9.4 billion in investment last year compared to $14 billion in 2019.

Despite a 39% drop in its FDI flow, Egypt nevertheless remained the country with the most foreign direct investment on the continent with $5.5 billion in 2020. In the Maghreb region, only Morocco maintained solid FDI flows with $1.6 billion attracted last year, about the same amount as the previous year.

In the sub-Saharan part, despite good results in countries such as Senegal (where FDI grew by 39% YoY), the decline in Ethiopia (-17% YoY) and South Africa (about -50%) have significantly hit the overall FDI flow in the region. FDI in SSA dropped by 11% YoY to $28 billion in 2020, partly due to the covid-19 pandemic and the decline in both the prices and demand for commodities, the report noted.

These figures confirm the forecasts initially made by the UN body. Last October, UNCTAD said FDI flows in Africa fell by 28% over the first 6 months of 2020. A situation that coincides with the -3.3% recession expected for sub-Saharan Africa in the same year.

It should be noted that global FDI flows fell by 42% overall, with a sharper decline in developed countries (-69%) than in developing countries (-12%).

About Yusuf Issa

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