Worldwide Foreign Direct Investment Decreased to $1.3 Trillion in 2023, Africa's Shared Amount Reached $53 Billion
In 2023, the global foreign direct investment (FDI) landscape underwent significant changes. The total FDI value decreased slightly by 2% to $1.3 trillion, according to recent reports.
One of the most notable declines was observed in international project finance, which saw a 31% decrease in value. Project finance is crucial for infrastructure investments, and this drop could potentially impact the development of various sectors worldwide.
Africa, a continent with growing economic potential, experienced a 3% decrease in FDI inflows, reaching $53 billion. Despite the overall decline, the continent saw an increase in greenfield projects, with over 800 projects announced, marking a 7% rise.
In Africa, Nigerian FDI increased significantly, rising from $895 million in 2022 to $1.87 billion in 2023. The Nigerian government's efforts to attract greenfield investments, particularly in renewable energy, showed promising results.
The African Continental Free Trade Agreement (AfCFTA) Investment Protocol was adopted in 2023, which is expected to boost intraregional FDI.
The continent also witnessed substantial investments in green hydrogen projects. Egypt, led by a consortium from the UAE's Masdar, is developing a 2 GW green hydrogen initiative in the Suez Canal Zone, aiming for up to 4 GW by 2030. Namibia's Hyphen project involves over $10 billion in investments to produce green ammonia and hydrogen, with significant government participation.
Other green hydrogen initiatives include a $34 billion project in Mauritania and $10.8 billion in Egypt. Investors have also committed $4 billion to a green hydrogen project in Egypt and planned a $2 billion project in Morocco.
Interestingly, African investors lead 20% of projects in services and selected manufacturing sectors, contrasting with resource-based industries where regional contributions are lower at 13%.
North America witnessed a 5% decline in FDI inflows, while Europe's FDI rebounded from negative $106 billion in 2022 to a positive $16 billion in 2023. However, other parts of Europe experienced a 14% decrease in FDI inflows in 2023.
The total value of greenfield projects in developing countries rose by 20%, highlighting a growing interest in sustainable and renewable energy projects. M&A activity, particularly impactful for foreign direct investment (FDI) in developed nations, plummeted by 46% in 2023.
FDI flows into developing countries decreased by 7% to $867 billion in 2023, primarily due to an 8% decline in developing Asia. This decline could be attributed to various factors, including economic instability and geopolitical tensions.
As we move forward, it will be interesting to see how these trends continue to evolve and how they shape the global economic landscape in the coming years.
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