Africa registered a 6% increase in Foreign Direct Investment inflows in 2018.
According to the United Nations Conference on Trade and Development (UNCTAD) in its Global Investment Trends Monitor, it increased to $40bn from $38bn in 2017.
Growth was recorded in few economies.
Relatively diversified economies such as Egypt and South Africa saw more stable and increasing FDI inflows
Egypt, where recent economic reforms have led to improved growth, was Africa’s biggest recipient of FDI in 2018, recording an inflow of $7.9bn, a 7 percent increase over the $7.4bn recorded a year earlier. According to UNCTAD, investment inflow was in real estate, food processing, oil and gas exploration and renewable energy.
South Africa received FDI amounting to $7.1bn in 2018 from $1.3bn in 2017, with large investments in mining, food processing, petroleum refining, information and communications technology, as well as renewable energy.
In contrast, Nigeria, Africa’s largest economy and top oil producer saw FDI drop 36 percent to $2.2 billion in 2018. This decline saw Ghana overtake Nigeria as the country with the highest FDI in West Africa, recording an inflow of $3.3 billion.
Policy decisions have been blamed for Nigeria’s poor FDI inflow in 2018, but UNCTAD expects 2019 to be better for the country, especially due to some significant greenfield project announcement in the oil and gas industry.
Ethiopia was the largest recipient of FDI in East Africa in 2018 Major investments in the country were in petroleum refining, mineral extraction, real estate, manufacturing and renewable energy.
UNCTAD concludes that progress in the implementation of the Africa Continental Free Trade Agreement (ACFTA), diversification in greenfield projects targeting the manufacturing sector and the stabilisation of commodity prices show that FDI in Africa could potentially grow in 2019 at a higher pace than the 6 percent recorded in 2018.
Meanwhile, global FDI fell by nearly a fifth in 2018 to an estimated $1.2trn from $1.47trn in 2017.