Foreign Direct Investment (FDI) flows to Africa have dropped significantly, according to a United Nations Centre for Trade and Development (UNCTAD) report.
The report said investment projects was down due to fiscal tightening. The report found that new investment project announcements – an indicator of forward trends – weakened in the first three quarters of 2022 while pointing to the ongoing tightening financial conditions and higher investor uncertainty.
It noted that FDI flows to developed economies were 22 percent lower in the second quarter, compared to the average of 2021, at an estimated $137 billion.
FDI flows to developing economies as a group showed some resilience, increasing by six percent to $220 billion.
The number of greenfield project announcements mostly in manufacturing dropped by 10 percent, whereas that of international project finance deals (mostly in infrastructure) stagnated at the 2021 level.
In both cases, monthly numbers show a downward trend. According to the report, project numbers fell across most industries, with a few exceptions, notably in extractives and petrochemicals.
In terms of value, greenfield projects still experienced growth, due to a few large announcements concentrated on electricity and gas supply.
