EGYPT remained Africa’s largest recipient of foreign direct investment (FDI) in 2019, recording $9bn, an increase of 11 percent, according to the United Nations Conference on Trade and Development (UNCTAD) World Investment Report (WIR 2020).
‘In 2019, FDI flows to Africa already declined by 10 percent to $45bn,’ the report said. ‘Tepid global and regional GDP growth and dampened demand for commodities inhibited flows to countries with diversified and natural resource-oriented investment profiles alike, although a few received higher inflows from large new projects.’
The report added that FDI flows to North Africa decreased by 11 percent to $14bn, with reduced flows in all countries except Egypt.
It noted that the economic reforms undertaken by the Egyptian government have improved macroeconomic stability and boosted investor confidence in the country. It indicated that, although FDIs were still driven by the oil and gas industry, investment in the non-oil economy was also taking place.
Sectors that have seen particularly notable investments include the communications, consumer goods and real estate sectors.
UNCTAD ranked Egypt as the African leader in re-investing 41 percent of foreign company profits, with the reinvested profits of multinational companies representing a notable share of FDI inflows received into African economies.
The report highlighted that cutting profit expectations will have a measurable impact on investment flows to Africa in 2020.
The report also noted that the Egyptian government has drafted new investment legislation. This obligates all companies to provide information and data to audit counting foreign investment.
The report pointed out that global FDI flows are forecast to decrease by up to 40 percent in 2020, from their 2019 value of $1.54 trillion, bringing FDI below $1 trillion for the first time since 2005. In addition, FDI is projected to decrease by a further 5 percent to 10 percent in 2021 and to initiate a recovery in 2022.