Abuja, Nigeria (CU)_ As per the data from the United Nations Conference on Trade and Development (UNCTAD), Nigeria has become the second favorite investment destination in Africa, with $2.6 billion foreign direct investment (FDI) in 2020, after Egypt. In its 11-page ‘Investment Trends Monitor’ that concentrated on global FDI flows, UNCTAD highlighted that investment to Nigeria dropped to $2.6 billion in 2020, which is lower than the country’s $3.3 billion reported in 2019.
Despite a substantial drop in inflows (-39 percent), Egypt was the top recipient of FDI, to an approximate $5.5 billion reported by the country in the year under review. South Africa received only $2.5 billion FDI last year, which is only half the amount of $4.6 billion reported in 2019. According to the reports, FDI flows to Africa in 2019 was $46 billion. In 2020, it was reduced by 18 percent to an estimated $38 billion.
The report from UNCTAD said, “Greenfield project announcements, an indication of future FDI trends, fell 63% to $28 billion, from $77 billion in 2019. The pandemic’s negative impact on FDI was amplified by low prices of and low demand for commodities”.
The report detailed about the FDI to Sub-Saharan Africa and Nigeria. It said, “FDI inflows to Sub-Saharan Africa decreased by 11 per cent to an estimated $28 billion. Inflows to Nigeria declined to $2.6 billion from $3.3 billion in 2019. Lower crude oil prices, coupled with the closure of oil development sites at the start of a pandemic due to movement restrictions, weighed heavily on FDI to Nigeria”.
The report further detailed the FDI to South Africa. It said, “FDI to South Africa almost halved to $2.5 billion from $4.6 billion in 2019. However, several large projects were announced, including an investment by Google (United States) of approximately $140 million in fiber optics sub-marine cable and an additional investment of $360 million by Pepsico (United States) to expand the capacity of Pioneer Foods.”
The UN report says global FDI flows dropped by 42% in 2020, from approximately $1.5 trillion to an estimated $859 billion. The decline in FDI was mostly reported in developed economies where FDI dropped by 69 per cent to $229 billion. Developing economies, however, reported a 12 percent decrease, representing about 72 percent of the global FDI share.
The report highlighted that China topped the list as the largest recipient of FDI and USA in the second place. It said, “Looking at top FDI host economies, China became the largest recipient, attracting an estimated $163 billion in inflows, followed by the United States with $134 billion”. On the 2021 outlook, the study projected that this year’s global FDI will remain poor.
