The United Nations Conference on Trade and Development (UNCTAD) has disclosed in its Global Investment Trends Monitor for 2018 that Nigeria’s foreign direct investment (FDI) fell by 36 per cent last year.
The report stated that despite Africa rising by 6 per cent in FDI inflows in 2018, Nigeria experienced a cut in its FDI inflows, falling 36 percent to $2.2 billion, while the continent’s FDI inflows hit $40 billion last year from $38 billion recorded in 2017. The Global FDI inflow fell by 19 per cent in 2018, reaching an estimated $1.2 trillion from $1.47 trillion.
But the recent Global Investment Trends Monitor report stated Nigeria reported a few significant greenfield project announcements in the oil and gas and chemical sectors, which could lead to a recovery in 2019.
Foreign Direct Investment inflow in Africa
Aside from Nigeria, another large oil producer, Angola recorded a decline in its foreign direct investment inflow to $5.1 billion in 2018. Meanwhile, Egypt topped the list of best performing FDI, after the country’s inflow increased by 7 per cent from $7.4 billion to $7.9 billion. South Africa recorded a strong recovery in 2018 after the country’s FDI inflow rise to $7.1 billion from $1.3 billion in 2017.
Factors aiding FDI inflow rise in Africa
Out of all the economyies in Africa, only a few of them experienced growth. Shifted focus from natural resources dominated the FDI profile of Africa, balancing distribution across all sectors, but was only partially visible. Among the diversified economies, Egypt and South Africa saw more stable and increasing FDI inflows. There were investment in real estate, food processing, oil and gas exploration, mining, petroleum refining, information and communication technologies, and renewable energy in Egypt, South Africa and Ethiopia.
Africa’s FDI inflow in 2019
Africa’s FDI inflow could grow at a higher pace in 2019 due to progress towards the implementation of the Continental Free Trade Agreement, diversification in greenfield projects targeting the manufacturing sector, and the stabilisation of commodity prices.