Foreign Direct Investment (FDI) to Africa surged to a record in 2021 with the United Kingdom (U.K) and France standing out as the largest investor countries at just Ksh.14.6 trillion.
According to the United Nations Conference on Trade and Development’s (UNCTAD’s) World Investment Report 2022, the U.K accounted for Ksh.7.6 trillion (US$.65 billion) followed by France at Ksh.7 trillion (US$.60 billion).
Despite the mighty investment, the continent accounted for only 5.2 percent of global FDI, up from 4.1 percent in 2020.
This was more than double the amount reported in 2020 when the COVID-19 pandemic weighed heavily on investment flows to the continent.
“Cross-border deals and international project finance were particularly strong, encouraged by loose financing conditions and infrastructure stimulus,” said U.N Secretary-General Antonio Guterres.
Most of the African countries saw a moderate rise in FDI in the year under review. Around 45 percent of the total was due to an intrafirm financial transaction in South Africa.
“If we exclude this transaction, the increase in FDI flows to Africa, while still positive, would be more in line with what we observed in other developing regions,” said James Zhan, director of UNCTAD’s investment and enterprise division.
However, East African nations only realized a mere 35 percent to just Ksh.960.8 billion of Ksh.9.7 trillion total FDIs on the continent.
Ethiopia, which has been termed the central hub for China’s Belt and Road Initiative, saw FDI flows rise by 79 percent to Ksh.503.8 billion in 2021.
Four out of five international project finance announcements in the country were in renewables.
Other notable increases were reported by Uganda (31% to Ksh.128.8 billion) and Tanzania (35% to Ksh.107.9 million), which saw new greenfield project announcements triple in 2021.
Kenya’s FDIs, however, dipped to Ksh.52.4 billion from Ksh.83.89 billion) in 2020.
Part of FDIs in Kenya is Mombasa Gate Bridge which will connect Mombasa Island with the South Coast and will cost Ksh.85 billion and will be funded by the Japan International Cooperation Agency (JICA).
Another one includes the U.K-funded Nairobi Central Railway whose construction work will begin in July and is estimated to cost Ksh.30 billion.
Even though investments in Central Africa remained flat, they still bit East Africa by onefold to Ksh.1.1 trillion.
FDI to the Democratic Republic of the Congo rose by 14 percent to Ksh.222.4 billion because of flows to offshore oil fields and mining.
Investment flows to Congo fell by 8 percent to Ksh.443.4 billion, but two international project finance deals were involving the construction of an oil facility for Ksh.19.4 billion have already been announced.