It has been three years now, and foreign direct investment (FDI) is not proving to scale all over the world, but not in Africa.
There have been reduced barriers to cross-border trade and affordable access to commodities courtesy of Global money. Global money is banking on African growth.
According to a report presented by the United Nations Conference on Trade and Development (UNCTAD), global FDI fell by $0.2 trillion between the years 2017 to 2018. In their 2019 World Investment report, it is clear that global FDI not only hit the lowest level since the global financial crisis but as also been on the decline for the past three years.
Africa defied this trend! An estimation of $46bn worth of FDI flowed into Africa in the year 2018. That presented an 11 percent increase compared to 2017. Why is this significant for the continent? When a company or an individual makes an FDI, they are establishing a long-term business interest in a foreign country. Africa has a continent hopeful that they will invest not only money but also time and soft assets.
The 52 African countries signed a law, The African Continental Free Trade Agreement (AfCFTA) that will allow them to buy and sell goods without tariffs. Therefore, the law plays a significant role in seeing that the goods are less expensive and more appealing to African consumers.
Global investors face commodities has a big draw. According to UNCTAD opinion, global money main aim is to profit from expected price increases, and that’s the main reason behind investing in African commodities such as gold.
Sources of capital
Some of the top foreign investors in African in the year 2017 are France, followed by the Netherlands, the United Kingdom, and the United States.
According to data presented by UNCTAD from 2013 to 2017, Chinese FDI in Africa grew 65 to percent. Netherlands topped the list by an FDI of up to 200 percent.
Each region with its investments
Truth is said, not all the 55 countries benefited equally from the 2018 FDI investment. Northern Africa investment scaled by $14bn from the previous year. This helped in offsetting less investment in Egypt, which was down by eight percent. Even though there was a decline in FDI in Egypt, data by UNCTAD shows that the country was still the largest recipient of FDI. Ethiopia received a lion share in matters FDI, after bringing in $3.3bn worth of FDI. Kenya not left behind received $1.6bn worth of FDI. The main focus for these investments was manufacturing, hospitality, oil, chemicals, and gas sector.
“Many East African nations have become more open to investment,” James Zhan, the director of UNCTAD’s Investment and Enterprise Division and the author of the report, told Al Jazeera. “Mauritius, for instance, is currently a lot of welcome to outside investment.
Over the past years, African countries have been a bedrock for opportunities, let us say business hub for foreign direct investors. Thanks to unlimited resources that exist in the regions.