A report by the United Nations Conference on Trade and Development (Unctad) shows that foreign direct investments (FDI) into Africa fell by $7 billion in 2020, largely due to the covid19 pandemic. The foreign direct investments dipped to $40 billion at the end of 2020, compared to $47 billion at the end of 2019.
In contrast, investment flows to developing nations in Asia defied the pandemic and rose to $535 billion in 2020, a 4% improvement from the previous year.
According to the UNCTAD report, commodity dependent economies like Eritrea, Burundi, and Tanzania were severely affected compared to non-commodity dependent nations like Kenya, Uganda, and Ethiopia.
Foreign Direct Investments to North Africa contracted by 25% to $10 billion, from $14 billion in 2019 as most North African nations reported significant declines in FDI last year. Egypt, the top recipient of FDI in Africa registered a 35% reduction to $5.9 billion in 2020.
The Southern Africa region reported a 16% drop in FDI to $4.3 billion while the West African region posted an 18% decreased to $9.8 billion.
Foreign direct investments to East Africa dropped to $6.5 billion in 2020 from $7.7 billion in 2019. Ethiopia was the top recipient of FDI in East Africa, pocketing over a third of the investments into the region.
Central Africa was the only region in Africa that booked an increase in FDI in 2020 mainly supported by increased inflows to the Republic of Congo. Foreign direct investments to the Central African region rose to $9.2 billion from $8.9 billion in 2019.
Unctad forecasts that global foreign direct investment flows will partially recover in 2021 by roughly 10% to 15%.
Related: Ethiopia and Kenya Ranked Region’s Top FDI destinations
