Foreign Direct Investment (FDI) into Nigeria nosedived to $187 million in 2022, the United Nations Conference for Trade and Development (UNCTAD) has said.
UNCTAD, in its World Investment Report 2023, revealed that the decline in FDI to Nigeria was “as a result of equity divestment.” Meanwhile, it also revealed that FDI flows to Africa declined to $45 billion in 2022 from the record $80 billion set in 2021.
“Nigeria saw FDI flows turn negative to -$187 million as a result of equity divestments. Announced greenfield projects, however, rose by 24% to $2 billion. Flows to Senegal remained flat at $2.6 billion. FDI flows to Ghana fell by 39% to $1.5 billion,” it stated.
The report stated further that the number of greenfield project announcements rose by 39 per cent to 766. Six of the top 15 greenfield investment megaprojects (those worth more than $10 billion) announced in 2022 were in Africa.
According to UNCTAD, FDI inflows have risen in four of the regional economic groupings on the continent in the past five years.
“FDI in the Common Market for Eastern and Southern Africa grew by 14 per cent to $22 billion. Flows rose also in the Southern African Development Community (quadrupling, to $10 billion), the West African Economic and Monetary Union (doubling, to $5.2 billion) and the East African Community (up 9 per cent, to $3.8 billion).
“Intraregional investment remained relatively small, despite an increase over the past five years. In 2022, intraregional greenfield project announcements represented 15 per cent of all projects in Africa (2 per cent in terms of value), as compared with 13 per cent (2 per cent in value) in 2017,” it stated.
However, looking at announced projects invested in by only African multinational enterprises, three-quarters of their value remained on the continent.
“In 2022, the biggest increase in announced greenfield projects was in energy and gas supply (to $120 billion from $24 billion in 2021). Project values in construction and extractive industries also rose, to $24 billion and $21 billion, respectively. The information and communication sector registered the highest number of projects.
“International project finance deals targeting Africa showed a decline of 47 per cent in value ($74 billion, down from $140 billion in 2021) but a 15 per cent increase in project numbers, to 157.
“European investors remain, by far, the largest holders of FDI stock in Africa, led by the United Kingdom ($60 billion), France ($54 billion) and the Netherlands ($54 billion),” it stated.
Globally, the FDI declined by 12 per cent in 2022, to $1.3 trillion, after a strong rebound in 2021 following the steep drop induced by COVID-19 in 2020, the report shows.
The decline was attributed to lower volumes of financial flows and transactions in developed countries. The slowdown was driven by overlapping crises: the war in Ukraine, high food and energy prices and debt pressures.
The fall in FDI flows was mostly caused by financial transactions of multinational enterprises in developed economies, where FDI fell by 37 per cent to $378 billion.
