Foreign direct investment to Africa fell in 2017 to $42 billion, a 21 per cent decline from 2016, according to the World Investment Report 2018, released last week by the United Nations Conference on Trade and Development (UNCTAD).
Inflows into Ghana slumped 7 per cent from 2016 figures to $3.3 billion in 2017.
According to the report weak oil prices and harmful ongoing macroeconomic effects from the commodity bust saw flows contract in Egypt, Mozambique, the Congo, Nigeria, and Angola. In addition, foreign investment to South Africa continued to underperform.
The report indicates that FDI inflows to diversified exporters, including Ethiopia and Morocco, were more resilient.
The report notes however, that FDI outflows from Africa rebounded by 8 per cent to $12 billion.
“The beginnings of a commodity price recovery, as well as advances in interregional cooperation through the signing of the African Continental Free Trade Area (AfCFTA) agreement, should encourage stronger FDI flows – to about $50 billion – in 2018, provided the global policy environment remains supportive,” it said.
The report said Ghana attracted $3.3 billion in FDI flows (down 7 per cent), on the back of fiscal consolidation and self-imposed reductions in government investment spending.
Until this past year, Ghana’s diversified economy had facilitated a continuous increase in its FDI flows since the 2000s, it states, adding that a firm price for gold and ongoing investment from Italy’s Eni to develop the large Sankofa gas field could further encourage FDI in 2018.
The report points out that Sankofa produced its first oil in 2017, with Eni having contributed the largest amount of FDI in Ghana’s history through its 44 per cent stake in the company. In contrast, FDI into Côte d’Ivoire, was up 17 per cent to $675 million, reflecting supportive public investments by the government and economic diversification, it said.
As one of the two fastest-growing economies in Africa (along with Ethiopia), Côte d’Ivoire has attracted FDI into consumer goods. Heineken (Netherlands) invested $35 million in 2017 to double beer production and compete with Castel (France). Hershey (United States) is set to help the country process more of its cocoa locally, boding well for future investment prospects. FDI into Senegal was up 13 per cent to $532 million. Russian producer KAMAZ will invest approximately $60.5 million in the first phase of truck assembly production in the country, it said.
By Emmanuel K. Dogbevi
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