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Friday, December 9, 2022

Investment flows to Africa reached a record $83 billion in 2021

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The continent noticed international direct funding rebound strongly after the autumn in 2020 brought on by the COVID-19 pandemic.

© ivanbrunom/Shutterstock | Employees in Mozambique use a hydraulic wrench to daring a brand new railway monitor.

Overseas direct funding (FDI) to African international locations hit a file $83 billion in 2021, based on UNCTAD’s World Funding Report 2022 revealed on 9 June.

This was greater than double the quantity reported in 2020, when the COVID-19 pandemic weighed closely on funding flows to the continent.

Regardless of the sturdy progress, funding flows to Africa accounted for under 5.2% of worldwide FDI, up from 4.1% in 2020.

Whereas most Africa international locations noticed a average rise in FDI in 2021, round 45% of the full was attributable to an intrafirm monetary transaction in South Africa.

“If we exclude this transaction, the rise in FDI flows to Africa, whereas nonetheless constructive, can be extra consistent with what we noticed in different creating areas,” mentioned James Zhan, director of UNCTAD’s funding and enterprise division.

When it comes to subregions, Southern Africa, East Africa and West Africa noticed their funding flows rise whereas these to Central Africa remained flat and North Africa registered a decline.

The most important holders of international property in Africa remained European, led by buyers in the UK ($65 billion) and France ($60 billion).
 

FDI inflows to the African continent and subregions, 2020-2021
(BIllions of {dollars})

Supply: World Funding Report 2022
 

FDI to Southern Africa elevated virtually tenfold to $42 billion

The sturdy enhance was due primarily to a big company reconfiguration in South Africa – a share alternate between Naspers and Prosus within the third quarter of 2021.

New venture bulletins within the nation included a $4.6 billion clear vitality venture finance deal sponsored by UK-based Hive Vitality and a $1 billion greenfield venture by US-based Vantage Information Facilities to construct its first African campus.

Funding flows to Mozambique grew by 68% to $5.1 billion. The nation noticed a soar in greenfield initiatives, together with UK-based Globeleq Technology’s plan to construct energy crops for $2 billion.

In the meantime, funding flows to Zambia remained unfavorable at -$457 million, a steep fall from -$173 million in 2020, due principally to a $1.5 billion copper mine divestment by Swiss-based Glencore to state-owned ZCCM Investments Holdings.

West Africa sees FDI enhance by 48% to $14 billion

Nigeria, West Africa’s largest recipient of FDI, noticed its flows double to $4.8 billion, primarily due to a resurgence in investments within the oil and fuel sectors.

Worldwide venture finance offers within the nation jumped to $7 billion. These included the $2.9 billion Escravos Seaport venture to assemble an industrial complicated.

Tasks in extractive industries additionally helped push FDI to Ghana as much as $2.6 billion – a rise of 39% in contrast with 2020.

Senegal additionally noticed a notable 21% enhance in FDI, which reached $2.2 billion. The nation registered a 27% rise in introduced greenfield initiatives.

Funding flows to East Africa elevated by 35% to $8.2 billion

Ethiopia, a central hub for China’s Belt and Highway Initiative, noticed FDI flows rise by 79% to $4.3 billion in 2021.

4 out of 5 worldwide venture finance bulletins within the nation had been in renewables.

Different notable will increase had been reported by Uganda (31% to $1.1 billion) and Tanzania (35% to $922 million), which noticed new greenfield venture bulletins triple in 2021.

Central African FDI remained flat at $9.4 billion

Whereas funding flows to Central Africa remained flat, FDI to the Democratic Republic of the Congo rose by 14% to $1.9 billion, with funding traits remaining constructive primarily due to flows to offshore oil fields and mining.

Funding flows to Congo fell by 8% to $3.7 billion, however two worldwide venture finance offers had been introduced within the nation. The most important entails the development of an oil facility for $166 million.

FDI to North Africa declined by 5% to $9.3 billion in 2021

Funding flows to Morocco rose by 52% to $2.2 billion in 2021 whereas Egypt noticed its FDI drop by 12% to $5.1 billion. Regardless of the decline, Egypt was Africa’s second-largest FDI recipient.

Pledges from Gulf States to take a position about $22 billion in varied financial sectors in Egypt might enhance FDI going ahead. Additionally, introduced greenfield initiatives within the nation greater than tripled to $5.6 billion final 12 months.

Greenfield investments remained low however initiatives in renewables grew

Regardless of the general constructive FDI pattern on the continent, whole greenfield bulletins remained low at $39 billion, displaying solely a modest restoration from the $32 billion recorded in 2020 – and means under the $77 billion registered in 2019.

In the meantime, the variety of worldwide initiatives in renewables in Africa climbed to 71 – practically double the 36 recorded in 2011.

These embrace a $20 billion venture to supply photo voltaic and wind vitality from Morocco to the UK through 3,800 km of sub-sea cables.

“For long-term prospects, the African continent has nice potential to draw worldwide funding within the inexperienced and blue economies, in addition to infrastructure,” Mr. Zhan mentioned.

“A problem is to additional enhance the funding local weather and strengthen Africa’s capability to soak up such sustainable funding.”

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