Foreign direct investment (FDI) in Africa has experienced significant fluctuations in recent years.

In 2021, FDI flows into Africa reached a record $83 billion—more than double the 2020 value—though this accounted for only 5.2% of global FDI.

However, by 2022, FDI fell to $45 billion, just 3.5% of the global total, reflecting volatility brought by global economic uncertainties and the COVID-19 pandemic.

Notably, South Africa led as the primary recipient in 2021, attracting $40.9 billion, with Egypt and Mozambique following, each drawing about $5.1 billion in FDI.

Nigeria and Ethiopia also featured prominently among the top recipients.

Most African countries, particularly in the south, east, and west, experienced growing inflows, though North Africa saw some declines, except in Morocco, where FDI increased by 52% in 2021.

Geographically, investment has focused on nations like South Africa, Egypt, Mozambique, Morocco, and Nigeria.

Industrially, the oil, gas, and mining sectors continue to dominate FDI, but there is marked growth in renewable energy, fintech, healthcare, and pharmaceuticals.

The information and communication sector leads by project count, while energy and gas garner the largest single project values, with announced investments reaching $120 billion.

The number of international renewable energy projects doubled from 2011 to 2021, including a notable $20 billion wind energy export project from Morocco to the UK.

European investors, especially from the UK and France, remain leading foreign owners of African FDI, with stocks of $65 billion and $60 billion, respectively.

China also plays a major role, though its investments have declined since their 2013 peak.

Major recent investors include the British International Investment—supporting Kelix bio and fintech company Moove—as well as multilateral partnerships driven by initiatives like the G7’s Build Back Better World.

Foreign direct investment (FDI) in Africa has experienced significant fluctuations in recent years.

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Content: FDI flows to North Africa down 5% in 2021
Foreign direct investment to North Africa fell 5 percent to $9.3 billion for the whole of 2021, according to a report on “Investing in the World ” released by the United Nations Conference on Trade and Development (UNCTAD) on June 9, 2022.
These investments, towards Tunisia, improved slightly from $652 million in 2020 to $660 million in 2021.
The same investment to Morocco increased by 52 percent to 2.2 billion dollars in 2021, compared with a 12 percent drop to 1.5 billion dollars in Egypt.
Despite the decline in these investments in Egypt, it remains the second country to benefit from the inflow of foreign direct investment in Africa.
According to the same report, the flow of foreign direct investment in Africa reached a record level of $83 billion for the whole of 2021, more than double the investment achieved for the whole of 2020.
Despite this significant growth, the flow of investment to Africa in 2021 represented only 5.2 percent of the global total, compared to 4.1 percent in 2020.
Most African countries saw a slight increase in foreign direct investment (FDI) in 2021.
These investments developed in South, East and West Africa, while they maintained their previous levels in Central Africa, while declining in North Africa.
Europeans remain the most important investors in Africa, led by investors from the United Kingdom ($65 billion) and France ($60 billion).
Increased investments in renewable energy
Despite the overall positive trend of foreign direct investment towards Africa, the announcement of new projects remained weak at $39 billion and shows only a weak recovery compared to $32 billion recorded in 2020 and less than $77 billion recorded in 2019.
In parallel, the number of international projects in the field of renewable energies in Africa increased to an estimated 71 projects, almost double the 36 projects completed in 2011.
Among these projects is a $20 billion project that aims to export wind energy to the UK from Morocco.
By laying 3,800 km of submarine cables.

What was the total FDI inflow to Africa in 2022 and how did it compare to 2021?

$45 billion, which was down from $80 billion in 2021

In 2021, FDI flows into Africa reached a record $83 billion—more than double the 2020 value—though this accounted for only 5.2% of global FDI.

However, by 2022, FDI fell to $45 billion, just 3.5% of the global total, reflecting volatility brought by global economic uncertainties and the COVID-19 pandemic.

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Content: Chairman of the Board of Directors and Editors
I'm sorry.
Mohamad Elbaz
Chairman of the Board of Directors and Editors
I'm sorry.
Mohamad Elbaz
It has reached $11 billion.
UN highlights doubling of foreign direct investment in Egypt
The United Nations Trade and Development Board (UNCTAD) said in its annual report on foreign direct investment flows for the year 2022, on Wednesday in Geneva, that Egypt witnessed an increase in foreign direct investment more than doubled to $11 billion as a result of increased cross-border M & A sales.
Investment flows to Africa fell to $45 billion in 2022 from a record $80 billion in 2021 and accounted for 3.5 percent of global foreign direct investment, the report said, adding that international project financing deals targeting Africa showed a 47 percent drop in value.
The report pointed out that the number of announcements of new projects increased by 39% to 766, and that six of the 15 largest new investment mega projects (those worth more than $10 billion) announced in 2022 were in Africa, stressing that Egypt witnessed an increase in foreign direct investment more than doubled to $11 billion as a result of increased cross-border M & A sales.
The number of new projects has more than doubled to 161, and the value of international project financing transactions has increased by two-thirds to $24 billion.
FDI inflows have risen over the past five years in four of the continent ’ s regional economic groupings, with FDI in the Common Market for Eastern and Southern Africa (COMESA) growing by 14% to $22 billion, and inflows also rising in the Southern African Development Community (SADC) (quadrupled to $10 billion) and the West African Economic and Monetary Union (WEMU) (doubled to $5.2 billion). East African Community (up 9% to $3.8 billion).
According to the report, the largest increase in 2022 was in new field projects announced in energy and gas supply (to $120 billion from $24 billion in 2021), and the value of projects in construction and extractive industries rose to $24 billion and $21 billion, respectively, while the information and communication sector recorded the largest number of projects.
European investors remain by far the largest owners of FDI in Africa, led by the United Kingdom ($60 billion), France ($54 billion) and the Netherlands ($54 billion).

Notably, South Africa led as the primary recipient in 2021, attracting $40.9 billion, with Egypt and Mozambique following, each drawing about $5.1 billion in FDI.

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Content: AFED: EGYPT RECEIVED $5.1 BILLION INVESTMENTS IN 2021
GDP growth is expected to rise to 4.4% this year
Abdulrahman Abu Al-Enein
6: 52 AM, Wednesday, 31 May 23
Recent data issued by the African Development Bank (AfDB) revealed that Egypt ranked second in terms of foreign direct investment flows in the continent in 2021 and attracted nearly $5.1 billion.
According to the Africa Economies Outlook 2023, South Africa was the largest recipient of foreign direct investment in 2021 with investments of more than $40.9 billion, nearly half of the total inflows to the continent in that year, followed by Egypt and Mozambique, which each attracted nearly $5.1 billion, representing about 6.2% of the total volume.
In the same context, the report expected Egypt ’ s GDP growth rate to decline to 4.4% this year from 6.6% estimated last year, and to rise to 5.1% next year.
The report pointed out that the inflation rate rose from 4.5% in the fiscal year 2020 / 2021 to 8.5% in the fiscal year 2021 / 2022 due to the rise in food and energy prices globally and the devaluation of the pound against the dollar.
He said that the current account deficit shrank to 3.5% of GDP in the fiscal year 2021 / 2022 compared to 4.4% in the previous fiscal year 2020 / 2021 due to the rise of tourism revenues to 10.7 billion dollars against 4.9 billion dollars, respectively.
The African Development Bank pointed out that the banking sector remains profitable and well capitalized, noting that the rate of non-performing loans reached 3.2% in June 2022, explaining that subsidies and social protection programs have reduced the impact of high food and energy prices on vulnerable families.
The Minister of Planning Hala Al-Said said in previous statements that despite the current effects of the Russian-Ukrainian crisis, which is likely to spread over the next year, the Egyptian economy is expected to grow by 4.2% by the end of the current fiscal year 2023-2022.
Al-Saeed said that with the development of inflationary trends in the Egyptian economy and despite the success of the state in curbing it and reducing it from very high levels (25% in 2017-2016) to less than 5% in 2021-2020, the rate increased to about 15% in 2022, and continued to rise, especially after the Russian-Ukrainian crisis.
Foreign direct investment in Mozambique increased by 68% in 2021, the report said, noting that these investments were largely directed to green projects in the energy sector.
Nigeria accounted for 5.8% of FDI inflows to Africa and Ethiopia 5.1% despite economic challenges.
The bulk of foreign direct investment in these countries is increasingly going to clean energy resource projects.
Mauritius and South Africa recorded the largest outflows in 2021, but a few countries recorded net inflows, including Egypt ($18 billion) and Nigeria ($5.9 billion).
The Bank estimates that capital flight through net investment outflows continued in 2022 at around $28 billion, which is close to the 2021 level due to higher interest rates linked to deflationary monetary policies in developed countries.
Official development assistance (ODA) to Africa stabilized at $65 billion in 2021 after the previous 28 percent jump in 2020.
The significant increase in such assistance since 2020 reflected the support provided by the international community to help African governments address the humanitarian, social and economic impacts of the coronavirus epidemic and the difficult global economic conditions.
The African countries that saw the largest increase in ODA in 2021 included Egypt (428%), Equatorial Guinea (115%), Angola (109%), Gabon (82%) and Sudan (60%).
The report pointed out that official development assistance to Egypt during 2021 amounted to about 8.2 billion dollars, Ethiopia 4 billion dollars, Sudan 3.8 billion dollars, the Democratic Republic of the Congo 3.5 billion dollars, Nigeria 3.4 billion dollars, and Kenya 3.1 billion dollars.
African countries need to leverage this external support to address existing vulnerabilities and build more resilient economies, given the risks that advanced economies are reallocating resources for reconstruction and humanitarian assistance in Ukraine at the expense of meeting the continent ’ s official development assistance commitments.
Ukraine received $16.1 billion in net official development assistance (ODA), equivalent to 7.8 percent of the total aid resources provided last year.
It is noteworthy that the report was launched in light of the annual meetings of the African Development Bank Group held under the auspices of President Abdel Fattah El Sisi in Sharm El Sheikh from 22 to 26 May.

Nigeria and Ethiopia also featured prominently among the top recipients.

Most African countries, particularly in the south, east, and west, experienced growing inflows, though North Africa saw some declines, except in Morocco, where FDI increased by 52% in 2021.

Geographically, investment has focused on nations like South Africa, Egypt, Mozambique, Morocco, and Nigeria.

What trends are emerging for African startups in 2022?

Which African countries are driving the venture capital ecosystem?

Which countries are preferred FDI destinations in Africa?

Industrially, the oil, gas, and mining sectors continue to dominate FDI, but there is marked growth in renewable energy, fintech, healthcare, and pharmaceuticals.

Title:

Content: When asked for his views on diversification as a strategy for portfolio management, Warren Buffett responded, “diversification is protection against ignorance”. Instead of a diversified portfolio, the Oracle of Omaha famously prefers a concentrated one, composed of a few sectors he has rigorously studied.

The UK’s investment strategy for the African continent is seemingly straight out of the Buffett playbook. As of 2020, the UK holds $65bn in total foreign direct investment (FDI) stock in Africa, second only to China. The vast majority of the portfolio is in oil, gas, mining and financial services.

In 2022 five new oil and gas deals worth £2.1bn were struck at the UK-Africa summit. In stark contrast, just £161m (8% of the total summit commitments) were invested in clean energy. One may agree with the UK’s strategy, suggesting that there aren’t many other high-yield investments to be made other than in oil majors, legacy miners and grey-haired banks. And besides, who would disagree with Buffett’s dictum? He is the sixth-wealthiest person in the world after all.

The truth of the matter is that Buffett would not be as wealthy as he is without adapting to changes in market trends, technologies and geopolitics. In May he sold his remaining stake in chip manufacturer TSMC due to geopolitical considerations (TSMC is based in Taiwan). A concentrated portfolio does not mean a stagnant one. It is this insight that the UK is overlooking, setting itself up to miss opportunities in those new industries rapidly taking shape across the world’s youngest and most promising continent.

Two trends are shaping markets across the continent. One of these is the adoption of financial technologies and the other is increased demand for healthcare, a consequence of Africa’s population boom and rising standards of living.

Fintech sector

McKinsey, a consultancy, estimated that revenues in the African fintech sector could surge eight times their current value to $30bn by 2025. Between 2020 and 2021 alone, the number of tech start-ups tripled to 5,200 companies. In 2021, seven of the 10 newly minted African unicorns (private companies valued over $1bn) are fintechs. As more Africans get connected and as digital identification verification models mature, fintechs will scale and profits will follow.

The second sector is pharmaceuticals. As Africa’s population grows and incomes rise, more money will be spent on healthcare. Within this sector, the Covid-19 pandemic laid bare the worrisome state of Africa’s vaccine and therapeutic manufacturing capabilities. Estimates vary, but some assessments forecast vaccine demand to double in volume from about 1-billion doses now to more than 2.7-billion doses by 2040. Industries adjacent to pharmaceuticals such as logistics, packaging and protective equipment are likely to cash in on increased private and public healthcare expenditure.

There are some positive signs that the newly revamped British International Investment (BII), formally the Commonwealth Development Corporation, is adjusting its investments because of these market trends. In 2020, the BII made a $150m investment in Kelix bio, a pan-African pharmaceutical platform focusing on manufacturing and marketing. It also executed a $20m, four-year structured credit deal with Moove, a fintech company that provides customers with cheaper access to vehicles.

Risk premium

These steps are positive but they are small. Inward FDI for Africa remains pitiful. Last year set a record for the continent, bringing in $83bn. To put this in context, the City of London in 2020 hit $831bn in FDI (10 times that of a continent of 54 countries), according to the Office of National Statistics.

What to make of this all? At least two insights. First, the UK should look to new sectors, taking bold bets in companies leading the fintech and pharmaceutical sectors. The second insight is that Africa’s risk premium is overpriced. There is opportunity beyond the industries of the 20th century; one just needs to look for them.

• Nott works for a venture facility for public benefit and is based in London. He writes in his personal capacity. You can follow his writing on Twitter @TheAfricaBrief.

Picture: 123RF

The information and communication sector leads by project count, while energy and gas garner the largest single project values, with announced investments reaching $120 billion.

The number of international renewable energy projects doubled from 2011 to 2021, including a notable $20 billion wind energy export project from Morocco to the UK.

European investors, especially from the UK and France, remain leading foreign owners of African FDI, with stocks of $65 billion and $60 billion, respectively.

Which countries are actively investing in Africa besides China?

China also plays a major role, though its investments have declined since their 2013 peak.

Title:

Content: Global investors waiting to pour in money in Africa to firewall China

By IANS | Published: August 2, 2021 02:09 PM2021-08-02T14:09:05+5:302021-08-02T14:25:34+5:30

New Delhi, Aug 2: After a tepid inflow of foreign direct investments (FDI) into Africa in 2020 amid the ...

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New Delhi, Aug 2: After a tepid inflow of foreign direct investments (FDI) into Africa in 2020 amid the Covid-19, investors are once again warming up to the continent. According to the United Nations Conference on Trade and Development (UNCTAD), FDI flows into Africa declined by 16 per cent in 2020 to $40 billion, from $47 billion in 2019.

China, the primary investor in the continent, has also slowed down its investments into the continent leaving an opportunity for other investors.

While the UNCTAD projected FDI inflow into Africa to grow this year, it said that the slow vaccine roll-out programme is a cause for concern. According to UNCTAD, FDI to the continent is projected to grow by only 5 per cent in 2021. But analysts said Africa as an investment destination has led to "an unprecedented curiosity" among other countries, which are now aggressively looking to mute China's dominance in the continent.

"Africa is critical in the new geopolitical and geo-economic contours. The continent, with its vast natural resources, offers a ready growth platform," an analyst told India Narrative.

According to a study published by Brookings Institution last week, Africa is home to 17 per cent of the world population. However, by 2050, it will have 26 per cent of the global population 2.53 billion people. "If Africa is not successfully integrated into the global economy, there could be a major threat to global prosperity and stability," the study said, adding that by 2050, the continent will be home to an estimated $16.12 trillion of combined consumer and business spending.

The African Continental Free Trade Area (AfCFTA) – the mega trade could give a push to intra-continental investment.

Touted as one of the biggest trade deals in the world, the AfCTA aims to create a single market comprising 1.3 billion people with a combined GDP of about $3.4 trillion.

Meanwhile, the US may have woken up late in recognising the potential of Africa but is making all attempts to make up for the lost time.

The Group of Seven or G7 has already decided to support US President Joe Biden's proposal of carving out a mega infrastructure plan under the "Build Back Better World" (B3W) initiative, expected to bring in transparency and sustainability. Besides, the initiative will be carried out only in consultation with local communities.

The G7 in its meeting in June also announced that it will increase its support to the Indo Pacific and Africa. "We resolve to collaborate with partners around the world, including in the Indo-Pacific and Africa, to actively promote these shared values for the good of all," said the statement.

India too has pressed the pedal on investments in the region. Sources said that the still-born Asia Africa Growth Corridor—the mega infrastructure project that was launched in 2017 to connect Asia and Africa must be revived.

Carnegie Endowment for International Peace noted that Chinese financiers committed $153 billion to African public sector borrowers between 2000 and 2019. "After rapid growth in the 2000s, annual lending commitments to Africa peaked in 2013, the year the BRI was launched. By 2019, though, new Chinese loan commitments amounted to only $7 billion to the continent, down 30 percent from $9.9 billion in 2018," it said.

Disclaimer: This post has been auto-published from an agency feed without any modifications to the text and has not been reviewed by an editor

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Major recent investors include the British International Investment—supporting Kelix bio and fintech company Moove—as well as multilateral partnerships driven by initiatives like the G7’s Build Back Better World.

What trends are emerging for African startups in 2022?

Which European countries lead investment in Africa?

Which countries are actively investing in Africa besides China?