Africa bucked the trend of the foreign investment globally, which registered a growth of 13% as compared to a year ago, according to the United Nations Conference on Trade and Development as brought out in its World Investment Report. FDI to the region clocked at US$ 32 billion reversing two years of continuous decline. More importantly, this rare feat was achieved while globally there was a marked fall in the cross-country FDI flows. A few reasons are adduced for the region to become FDI savvy, such as the development of new mining and oil projects, setting up of a new U.S. development-finance institution, etc. The UN report on FDI which was just released is indicative that the positive traction would continue for 2019 also. There was a drop of 27% in the case of developed economies, the lowest since 2004. The ratification of the African Continental Free Trade Area Agreement, though had come into effect only recently might have signaled positive vibes among investors. Among the African countries, there is a wide disparity in the FDI flows. South Africa attracted US$ 4.2 billion, though a major chunk of it is intra-company loans. Importantly, the country is working towards channelizing a whopping US$ 100 billion by 2023.
The country which presented a poor show during the year was Nigeria. FDI flow plunged by 43% mainly driven by the disputes erupted between South Africa’s MTN and the Nigerian government. Also, banks like HSBC and UBS have closed their offices caught up in unsavory developments. It may be noted that Nigeria is yet to ratify the AfCFTA.
The other countries, which have attracted FDI included Ghana (US$ 3 billion), Ethiopia (US$ 3.3 billion), Uganda (US$ 1.3 billion). Oil and gas sector was a major area that attracted investments in these countries.
