A latest report by the United Nations Conference on Trade and Development( UNCTAD) has revealed that Foreign Direct Investment (FDI) flows to the Global South, which includes Nigeria and other African countries, dropped to $841 billion in a global context of weak investment and economic uncertainty.
FDI is an important source of capital for infrastructure projects. FDI flows to developing countries fell by nine per cent to $841 billion in 2023.
Developing countries in Asia felt the brunt of the decline, registering a 12 per cent drop, while flows to Africa and Latin America and the Caribbean countries remained more or less stable.
The decrease in FDI to developing regions last year occurred in a global context of weak investment and economic uncertainty.
Although flows worldwide defied earlier expectations and grew by a marginal three per cent in 2023 to an estimated $1.37 trillion, “the headline increase was due largely to higher values in a few European ‘conduit’ economies,” the report says.
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Strikingly, when these conduit economies are excluded, global FDI flows show a steep 18 per cent decline in 2023.
Africa’s FDI flows remained nearly unchanged in 2023 at an estimated $48 billion, marking a slight one percent decrease compared to the previous year.
The region saw an increase in greenfield project announcements, particularly in Morocco, Kenya and Nigeria. However, a significant one third reduction in project finance deals – higher than the global average – raises concerns for the future of infrastructure financing on the continent.
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