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

The report says this is more than double the total recorded in 2020, as the Covid-19 pandemic weighed heavily on investment flows to the continent.

Despite this strong growth, investment flows to Africa accounted for only 5.2% of global FDI, compared to 4.1% in 2020.

Most countries in Africa experienced a moderate increase in FDI in 2021. Indeed, it should be noted that around 45% of the total is linked to an intra-company financial transaction in South Africa.

“If we exclude this transaction, the increase in FDI flows to Africa, while still positive, would be more in line with what we have seen in other developing regions,” said James Zhan, Director of UNCTAD’s Investment and Enterprise Division.

In terms of sub-regions, the report notes that Southern Africa, East Africa and West Africa have seen their investment flows increase, while those destined for Central Africa are remained stable and that North Africa recorded a decline.

According to UNCTAD, the largest holders of foreign assets in Africa remained European, led by investors from the United Kingdom ($65 billion) and France ($60 billion).

FDI to Southern Africa has increased almost tenfold

FDI to Southern Africa increased almost tenfold to $42 billion. This strong increase is mainly due to a major corporate reconfiguration in South Africa.

New projects announced in the country include a $4.6 billion clean energy project financing sponsored by UK-based Hive Energy and a $1 billion greenfield investment project by US-based Vantage. Data Centers to build its first African campus.

Investment flows to Mozambique increased by 68% to $5.1 billion. The country has seen a jump in new investment projects, notably that of the British company Globeleq Generation to build power plants for 2 billion dollars.

Meanwhile, investment flows to Zambia remained negative at -$457 million, a sharp drop from -$173 million in 2020, mainly due to the disposal of a 1,000-million copper mine. 5 billion dollars by the Swiss company Glencore to the public company ZCCM Investments Holdings.

Increases also recorded in West and East Africa

Nigeria, the top recipient of FDI in West Africa, saw its inflows double to $4.8 billion, mainly due to a recovery in investment in the oil and gas sectors, the report says. of UNCTAD.

International project finance deals in the country jumped to $7 billion. These include the project to build an industrial complex in the seaport of Escravos, worth $2.9 billion.

Projects in the extractive industries also helped boost FDI in Ghana to $2.6 billion, a 39% increase from 2020.

Senegal also saw a notable 21% increase in FDI, which reached $2.2 billion. The country recorded a 27% increase in new investment projects announced.

Investment flows to East Africa increased by 35% to $8.2 billion

For example, Ethiopia, the central hub of China’s “Belt and Road” initiative, saw FDI flows increase by 79% to $4.3 billion in 2021.

Four out of five international project funding announcements in the country are for renewable energy, UNCTAD reports

Other notable increases were reported by Uganda (31% to $1.1 billion) and Tanzania (35% to $922 million), which saw new investment project announcements triple in 2021 .

Photo: World Bank/Jonathan Ernst

Workers at a power plant in Takoradi, Ghana (files). Photo Jonathan Erns/World Bank

FDI from Central Africa stabilizes at 9.4 billion dollars

While investment flows to Central Africa remained stable, the report indicates that FDI to the Democratic Republic of Congo increased by 14% to reach $1.9 billion, with investment trends remaining mainly positive due to flows to offshore oil fields and mines.

Investment flows to Congo fell 8% to $3.7 billion, but two international project finance deals were announced in the country. The most important concerns the construction of an oil installation for 166 million dollars.

Egypt, second largest recipient of FDI in Africa

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

Investment flows to Morocco increased by 52% to $2.2 billion in 2021, while Egypt saw its FDI drop by 12% to $5.1 billion. Despite this decline, Egypt is the second largest recipient of FDI in Africa.

Gulf states’ pledges to invest around $22 billion in various economic sectors in Egypt could boost FDI in the future. Meanwhile, greenfield projects announced in the country more than tripled to $5.6 billion last year.

A technician tends to solar panels on the roof of a warehouse in Lusaka, Zambia.

UNDP/Karin Schermbrucker

A technician tends to solar panels on the roof of a warehouse in Lusaka, Zambia.

Renewable energy projects increased

Although new investments have remained low, renewable energy projects have increased.

Despite the overall positive FDI trend on the continent, total new project announcements remained low at $39 billion, showing only a modest recovery from the $32 billion recorded in 2020 – and well below. of the $77 billion recorded in 2019.

At the same time, the number of international renewable energy projects in Africa soared to 71 – nearly double the 36 recorded in 2011.

Among these is a $20 billion project that aims for Morocco to supply solar and wind power to the UK via 3,800 km of submarine cables.

“In the long term, the African continent has great potential to attract international investment in the green and blue economies, as well as in infrastructure,” Zhan said. “The challenge is to further improve the business climate and build Africa’s capacity to absorb these sustainable investments.”

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