The outlook for FDI in Africa

• Main Author: Gopaldas, Ronak
• Other Authors: Nanyang Business School
• Format: Newsletter
• Language: English
• Published: 2023
• Subjects: Business; Business::Finance::Investments; Africa; Foreign Direct Investment; Investment
• Online Access: https://www.ntu.edu.sg/cas/news-events/news/details/the-outlook-for-fdi-in-africa; https://hdl.handle.net/10356/166348
• Institution: Nanyang Technological University

Foreign direct investment (FDI) in Africa reached a record US$83bn in 2021, more than double 2020’s pandemic depressed figure of US$39bn. While the figure accounted for as much as 5.2% of global FDI, the sizeable jump was due to a single transaction in South Africa – the US$112 million crossholding share swap that Naspers did with its Netherland-based subsidiary Prosus in July to unlock the value in its holding of Chinese internet giant, Tencent. For the rest of the continent, the figures were less than sanguine. With the global growth outlook muddied by high inflation and a rising rate trajectory, Africa’s growth outlook too has tempered. Compounding matters, the commodity rally is showing signs of losing steam. Mining investment is a major contributor to Africa’s FDI inflows. In this article, we examine the drivers behind continental investment flows over the past two years and which countries are best positioned to attract FDI over the coming five years. We will also look at what sectors stand to be the biggest investment drivers, key among them energy and renewables. Finally, where do the opportunities lie, both for the continent as well as the private sector looking to capitalize on Africa’s large investment needs.