Foreign direct investment (FDI) to African countries hit a record $83 billion in 2021, according to UNCTAD’s World Investment Report 2022 published on 9 June.
This was more than double the amount reported in 2020, when the COVID-19 pandemic weighed heavily on investment flows to the continent.
Despite the strong growth, investment flows to Africa accounted for only 5.2% of global FDI, up from 4.1% in 2020.
While most Africa countries saw a moderate rise in FDI in 2021, around 45% of the total was due to an intrafirm 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 observed in other developing regions,” said James Zhan, director of UNCTAD’s investment and enterprise division.
In terms of subregions, Southern Africa, East Africa and West Africa saw their investment flows rise while those to Central Africa remained flat and North Africa registered a decline.
The largest holders of foreign assets in Africa remained European, led by investors in the United Kingdom ($65 billion) and France ($60 billion).
Investment flows to East Africa increased by 35% to $8.2 billion
- Ethiopia, a central hub for China’s Belt and Road Initiative, saw FDI flows rise by 79% to $4.3 billion in 2021.
- Four out of five international project finance announcements in the country were in renewables.
- Other notable increases were reported by Uganda (31% to $1.1 billion) and Tanzania (35% to $922 million), which saw new greenfield project announcements triple in 2021.
FDI to East Africa grew by 35 per cent to $8.2 billion. Flows to Ethiopia reached $4.3 billion. Chinese investments tripled in 2021 (Ethiopia is a central hub for China’s Belt and Road Initiative).
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