Global FDI decrease to $1.3 trillion in 2023, Africa’s share just $53 billion

Africa’s FDI inflows dropped by 3% to $53 billion, while Nigeria and other African countries experienced a varied landscape of investment activities.

These is according to the World Investment Report 2024 prepared by a team at the United Nations Conference on Trade and Development (UNCTAD).

Despite the overall decline, the number of greenfield projects in Africa rose by 7%, with over 800 projects announced.

These projects have the potential to generate an additional 200,000 jobs across the continent.

According to the report, Nigeria attracted $1.87 billion in FDI in 2023 up from $895 million in 2022 but down from $3.3 billion. Latest data from the National Bureau of Statistics reported Nigeria generated $3.9 billion in 2023 out of which just $377 million.

In Nigeria, the government’s focus on attracting greenfield investments, especially in renewable energy, bore some fruit. The country introduced new fiscal and non-fiscal incentives aimed at encouraging investments in renewable energy.

This move aligns with similar initiatives in Italy and South Africa, which also adopted measures to boost renewable energy investments.

The African Continental Free Trade Agreement (AfCFTA) Investment Protocol, adopted in 2023, is expected to contribute to growing intraregional FDI.

The share of intraregional projects is higher in services and selected manufacturing industries, with 20% of projects by African investors, than in resource-based processing industries, with only 13% of projects originating from the region.

For instance, an investor group announced a deal for green hydrogen production totaling $4 billion in Egypt, and another group planned a $2 billion hydrogen project in Morocco.

Additionally, Africa attracted $10.8 billion in project finance for wind and solar electricity production, with the largest projects located in Egypt, South Africa, and Zimbabwe.

Globally, foreign direct investment decreased marginally by 2% to $1.3 trillion in 2023. This headline figure was affected by significant fluctuations in financial flows through a few European conduit economies. Excluding these conduits, global FDI flows were more than 10% lower than in 2022.

International project finance and cross-border mergers and acquisitions (M&As) were particularly weak in 2023. The value of M&As, which predominantly impact FDI in developed countries, fell by 46%. Project finance, crucial for infrastructure investment, dropped by 26%.

International project finance and cross-border mergers and acquisitions (M&As) were particularly weak in 2023. The value of M&As, which predominantly impact FDI in developed countries, fell by 46%. Project finance, crucial for infrastructure investment, dropped by 26%.

Despite these declines, the number of greenfield projects in developing countries increased by 15%, with values climbing by 20%. This partially offset declines in international project finance deals, which fell by 26% in number and 31% in value.