For the third year in a row, foreign direct investment (FDI) is down all over the world, but not in Africa. From 2017 to 2018, global FDI fell from $1.5 trillion to $1.3 trillion, according to an analysis by the United Nations Conference on Trade and Development (UNCTAD).
In 2018, roughly $46bn worth of FDI flowed into Africa, an 11 per cent increase compared to 2017.
What’s Foreign Direct Investment?
Foreign direct investment (FDI) is an investment made by a firm or individual in one country for business interests located in another country. Generally, FDI takes place when an investor establishes foreign business operations or acquires foreign business assets, including establishing ownership or controlling interest in a foreign company.
Zoom out: The United States remained the largest recipient of FDI, followed by China, Hong Kong (China) and Singapore.
What about Nigeria?
While FDI in sub-Saharan Africa rose by 13 per cent last year to $32bn, Nigeria’s own dropped by 43 per cent to $2bn.
Why this matters.
This is good for Africa because when a company or an individual makes an FDI, they are said to be establishing a long-term business interest in a foreign country. The expectation is that they will not only invest money, but also time, and soft assets (i.e. technology, expertise, and training).
It only keeps getting better, The African Continental Free Trade Agreement (AfCFTA) was signed into law in May, an agreement that allows 52 African countries to buy and sell goods without tariffs, this will make them less expensive, and therefore more appealing to African consumers.
Dig deeper: Read the World Investment Report for 2018.