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Africa's 13% boost in FDI flow: South Africa, Ghana, Ethiopia big winners

Africa's 13% boost in FDI flow: South Africa, Ghana, Ethiopia big winners

Africa

<p>Foreign investment in sub-Saharan Africa rose 13% last year to $32 billion, bucking a global downward trend and reversing two years of decline, according to a United Nations report.</p> <p>Development of new mining and oil projects, a new U.S. development-finance institution and the ratification of an agreement to create a continent-wide free-trade area could further boost foreign direct investment (<span class="caps">FDI</span>) in 2019, it said.</p> <p>Africa stands in sharp contrast to developed economies, which saw <span class="caps">FDI</span> inflows plunge 27% to their lowest level since 2004, the United Nations Conference on Trade and Development wrote in its “World Investment Report”.</p> <p>Some African countries fared better than others, however. The Southern Africa region performed the best, taking in <span class="caps">FDI</span> of nearly $4.2 billion, up from -$925 million in 2017. Foreign investment in South Africa more than doubled to $5.3 billion.</p> <p>President Cyril Ramaphosa, who took office last year pledging to revive the economy, is seeking to attract $100 billion in <span class="caps">FDI</span> to Africa’s most developed economy by 2023.</p> <p>Though much of the South African jump came from intracompany loans, new investments included a $750 million Beijing Automotive Group plant and a $186 million wind farm being built by the Irish company Mainstream Renewable Energy.</p> <p>By contrast, inward <span class="caps">FDI</span> to Nigeria, a major oil producer, plunged 43% to $2 billion. Investors were put off by a dispute between the government and South African telecom giant <span class="caps">MTN</span> over repatriated profits. Banks <span class="caps">HSBC</span> and <span class="caps">UBS</span> both closed representative offices there in 2018.</p> <p>That left Ghana, which is in the midst of an oil and gas boom and saw inflows of $3 billion, as West Africa’s leading destination for foreign investment. Italy’s Eni Group was behind Ghana’s largest greenfield investment project.</p> <p>Ethiopia remained East Africa’s top recipient of <span class="caps">FDI</span> at $3.3 billion, despite an 18% drop compared with the year before.</p> <p>Kenya, Uganda and Tanzania all saw increases in <span class="caps">FDI</span> inflows. Foreign investment in Uganda jumped 67% to a record $1.3 billion, boosted by the oil and gas development of a consortium that includes France’s Total, <span class="caps">CNOOC</span> of China and London-listed Tullow Oil.</p> <p>The creation of the U.S. International Development Finance Corp could help support <span class="caps">FDI</span> inflows this year. A replacement for the Overseas Private Investment Corp, it will be have a budget of $60 million and a mandate to make equity investments.</p> <p>“The ratification of the African Continental Free Trade Area Agreement could also have a positive effect on <span class="caps">FDI</span>, especially in the manufacturing and services sectors,” the report said.</p> <p>The AfCFTA aims to eliminate tariffs between member states, creating a market of 1.2 billion people with a combined <span class="caps">GDP</span> of more than $2.2 trillion.</p> <p><strong><em><span class="caps">REUTERS</span></em></strong></p>

The ratification of the African Continental Free Trade Area Agreement could also have a positive effect on FDI, especially in the manufacturing and services sectors.