This archive report was first published on 28 June 2021.
Published on June 28, 2021, a report by the United Nations Conference on Trade and Development (UNCTAD) highlights a substantial decline in foreign direct investments (FDI) into Africa in 2020. The COVID-19 pandemic was largely responsible for this downturn.
According to the report, FDI into Africa dipped to $40 billion at the end of 2020, a $7 billion decrease from the previous year's $47 billion. This decline was not limited to Africa, as investment flows to developing nations in Asia defied the pandemic and rose to $535 billion in 2020, a 4% improvement from the previous year.
Commodity-dependent economies such as Eritrea, Burundi, and Tanzania were severely affected by the decline in FDI, whereas non-commodity dependent nations like Kenya, Uganda, and Ethiopia fared better. The Southern Africa region reported a 16% drop in FDI to $4.3 billion, while the West African region posted an 18% decrease 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, accounting for over a third of the investments into the region. In contrast, 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.
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
