FDI flows into Africa: A tale of two tales…

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FDI flows into Africa: A tale of two tales...FDI flows into Africa: A tale of two tales...

Recently the UNCTAD released 2019 World Investment Report, showing the trend of global FDI in 2018. Global FDI declined for the third consecutive year after faltering 13.0% in 2018 to settle at $1.3tn. Interestingly, FDI into Africa ignored the global trend, increasing 11.0% to $46.0bn. What caught our attention is the differing outcomes of FDI into the giant economies on the continent – Nigeria and South Africa.

Earlier, the IMF had anticipated growth to remain below trend in both countries and weigh heavily on the region’s prospects. Yet, South Africa more than doubled its FDI flows in 2018 as the Ramphosa-led administration double-down on its aim to attract a $100bn worth of FDI by 2030.

FDI flows into Africa: A tale of two tales...

For Nigeria, while UNCTAD reported a 43.0% decline in FDI to $2.0bn, losing its ‘position’ as the largest recipient of FDI in West Africa to Ghana, the accuracy of this figure seems to be disputed by the Central Bank of Nigeria (CBN), whose database indicated that FDI into Nigeria increased by 24.3% to $1.3bn in 2018. However, we observe that FDI flow has remained low compared to the levels in 2015 ($1.5bn) and 2014 ($2.3bn) respectively.

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Clearly, a confluence of jitters that trailed the 2019 general elections, the string of disputes between regulators and some Multinational Companies and the weak macroeconomic framework is to be blamed for this. Looking ahead, the speed of FDI flows into Nigeria will depend on the clarity of policy and measures to address structural vulnerabilities in the economy.

 

UNITED CAPITAL RESEARCH

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FDI flows into Africa: A tale of two tales...FDI flows into Africa: A tale of two tales...

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FDI flows into Africa: A tale of two tales...FDI flows into Africa: A tale of two tales...

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