Overall foreign direct investment (FDI) to West Africa decreased, and FDI to Ghana also dropped in 2019, the latest report of the United Nations Commission on Trade and Development (UNCTAD) World Investment Report 2020 released last week and copied to Ghana Business News says.
According to the report, FDI to Ghana fell by 22 per cent to approximately $2.3 billion in 2019.
“Investment was concentrated in oil and gas facilities, mining (including gold and manganese) and to some degree in agriculture (cocoa),” it said. It however, noted that there are plans for investment diversification, including attracting investment in the country’s six-phase Railway Master Plan, which is set to commence in 2020.
In sub-Sahara Africa, the report says after a significant increase in 2018, FDI flows decreased by 10 per cent in 2019 to $32 billion.
“This decrease can mostly be attributed to a decline in investment flows to traditional major investment recipients, including Nigeria, South Africa and Ethiopia,” the report explained.
It states that FDI to West Africa decreased by 21 per cent to $11 billion in 2019.
This decrease, the report states, was largely due to the steep decline in investment in Nigeria, after consecutive increases in 2017 and 2018.
“Inward FDI to Nigeria almost halved, to $3.3 billion, due to a slowdown in investment in the oil and gas industry,” it added.
The development of a $600 million steel plant in Kaduna state offers some evidence of investment diversification, a long-standing policy objective, the report said.
Senegal however, saw an increase by 16 per cent to $1 billion in 2019. Owing to historical ties, France has been the biggest investor in Senegal, but recently there have been important investments from other countries, including China, Turkey and the United Arab Emirates, the report said.
In 2019, Turkish steelmaker Tosyali launched the Tosyali Economic Zone with the aim to develop a steel industry cluster. A ceramics factory built by Twyford (China) was inaugurated with a cumulative investment of nearly $50 million in Thies, Senegal, it added.
According to the report, investment to Côte d’Ivoire increased by 63 per cent to $1 billion on the back of sustained economic growth, with investments in natural resources, agriculture and services.
Globally, the report indicates that flows of FDI will be under severe pressure this year as a result of the COVID-19 pandemic. It states further that investments are expected to fall sharply from 2019 levels of $1.5 trillion, dropping well below the trough reached during the global financial crisis and undoing the already lackluster growth in international investment over the past decade.
“Flows to developing countries will be hit especially hard, as export-oriented and commodity-linked investments are among the most seriously affected. The consequences could last well beyond the immediate impact on investment flows,” it said.
The report however, notes that the crisis could be a catalyst for a process of structural transformation of international production this decade, and an opportunity for increased sustainability, but this will depend on the ability to take advantage of the new industrial revolution and to overcome growing economic nationalism. Cooperation will be crucial; sustainable development depends on a global policy climate that remains conducive to cross-border investment.
By Emmanuel K. Dogbevi
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