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Foreign Direct Investment in Africa Records a 7% Drop

The United Nations Conference on Trade and Development (Unctad) report shows foreign direct investments (FDI) into Africa fell by $7 billion in 2020. The foreign direct investments dipped to $40 billion at the end of 2020, compared to $47 billion at the end of 2019. The decline was mainly attributed to the prevailing pandemic COVID-19, which resulted in a recession in most countries.

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.

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.

Unctad forecasts that global foreign direct investment flows will partially recover in 2021 by roughly 10% to 15%

Read also; East Africa Records Double-Digit Growth in FDI at $11.5 Billion.