UNCTAD: Nigeria Posted Negative FDI of $187m in 2022 Due to Equity Divestments

Ndubuisi Francis in Abuja

Nigeria posted a negative Foreign Direct Investment (FDI) flows of -$187 million  as equity divestments defined the investment environment in 2022, the World Investment Report 2023, which was released yesterday by the United Nations Conference on Trade and Development (UNCTAD) has revealed.

Data from the National Bureau of Statistics (NBS) had earlier in April indicated that FDI into the country fell by 33 per cent in 2022.

The UNCTAD report also showed that foreign flows to Africa dipped to $45 billion in 2022 from the record $80 billion in 2021.

They accounted for 3.5 per cent of global FDI.

According to the World Investment Report 2023, international project finance deals targeting Africa showed a decline of 47 per cent in value.

It stated that the number of greenfield project announcements rose by 39 per cent to 766. Six of the top 15 greenfield investment megaprojects (those worth more than $10 billion) announced in 2022 were in Africa.

In North Africa, Egypt saw FDI more than double to $11 billion as a result of increased cross-border merger and acquisition (M&A) sales.

Announced greenfield projects more than doubled in number, to 161. International project finance deals also rose in value by two thirds, to $24 billion, according to the report. Also, it showed that flows to Morocco dipped slightly by 6 per cent, to $2.1 billion.

“However, in West Africa, Nigeria saw FDI flows turn negative to -$187 million as a result of equity divestments.

Announced greenfield projects, however, rose by 24 per cent to $2 billion.

“Flows to Senegal remained flat at $2.6 billion while FDI to Ghana fell by 39 per cent to $1.5 billion.

“In East Africa, flows to Ethiopia decreased by 14 per cent to $3.7 billion; the country remained the second largest FDI recipient on the continent. FDI to Uganda grew by 39 per cent to $1.5 billion on investment in extractive industries. FDI to Tanzania increased by 8 per cent to $1.1 billion.

“In Central Africa, FDI in the Democratic Republic of the Congo remained flat at $1.8 billion, with investment sustained by flows to offshore oil fields and mining.

In Southern Africa, flows returned to prior levels after the anomalous peak in 2021 caused by a large corporate reconfiguration in South Africa,” it added.

According to the report, FDI in South Africa was $9 billion – well below the 2021 level, but doubled the average of the last decade.

“Cross-border M&A sales in the country reached $4.8 billion from $280 million in 2021. In Zambia, after two years of negative values, FDI rose to $116 million,” it added.

The report revealed a widening annual investment deficit that developing countries were facing as they work to achieve the Sustainable Development Goals (SDGs) by 2030.

“The gap is now about $4 trillion per year – up from $2.5 trillion in 2015 when the SDGs were adopted,” it added.

The report showed that global FDI fell 12 per cent in 2022 and analysed how investment policy and capital market trends impact investment in the SDGs, particularly in clean energy.

It highlighted that developing countries needed renewable energy investments of about $1.7 trillion each year, but attracted only $544 billion in clean energy FDI in 2022.

According to the report, although investments in renewables had nearly tripled since 2015, most of the money have gone to developed countries.

It called for urgent support to developing countries to enable them to attract significantly more investment for their transition to clean energy.

It proposed a compact setting out priority actions, ranging from financing mechanisms to investment policies, to ensure sustainable energy for all.