Sopuruchi Onwuka

Latest global trade reports show the incongruity of Africa’s rising foreign direct investments and low access to development finance; highlighting the predicament of world’s least developed countries, especially West Africa, where nations remain consistently remain in search of both foreign direct investments and development financing.

Whereas global trade and investment reports churned out by the United Nations Conference on Trade and Development (UNCTAD) for 2024 indicate significant 75 percent jump in Africa’s foreign direct investments to $97 billion, they still show the black continent’s gloomy position at the bottom of global ranking by value of hosted investments.

According to the latest World Investment Report from UNCTAD, Africa recorded significant rebound in foreign direct investment (FDI) inflows 2024, bolstered by liberalization and facilitation efforts across the continent. But despite posting 75 percent increase in its FDI in the year and a total of $97 billion in investment value, the performance represents just 6 percent of total investments that moved across the world in the period.

Closer look also showed that the mode of investment spread leaves some parts of the continent totally with nothing to show; as the reported surge is driven merely by an international project finance deal for urban development in Egypt. Besides that, FDI in Africa rose 12% to about $62 billion, comprising 4% of global inflows.

The investment attraction performance is direct outcome of overall investment facilitation efforts accounting for 36% of policy measures as liberalization dominated policymaking in Africa and Asia.  

The report shows that European investors hold the largest FDI stock in Africa, followed by the United States and China.

Investment from China, valued at $42 billion, is diversifying into sectors like pharmaceuticals and food processing.

One third of projects linked to the Belt and Road Initiative, a global development initiative championed by the country, now focus on social infrastructure and renewable energy.

In 2024, foreign investment went up across most African subregions, the UNCTAD reports stated, with North Africa leading the way.

Besides Egypt’s strong performance, FDI in Tunisia increased by 21% to $936 million and that of Morocco grew by 55% to $1.6 billion.

Across the continent, international project finance (IPF) deals rose 15% in value, fueled by large energy and transport infrastructure projects. In Egypt, IPF commitments more than doubled.

Project numbers, however, fell by 3%. Renewable energy was the only sector with notable growth, featuring seven major deals worth about $17 billion, including mainly offshore power cables and wind and solar plants in Egypt. Other renewable energy projects occurred in Morocco, Namibia and Tunisia.

By contrast, greenfield investments declined in Africa, with announcements dropping 5% and value down 37% to $113 billion, compared with $178 billion in 2023. Most countries saw fewer greenfield projects, except North Africa, where greenfield investments rose 12% to $76 billion, making up two thirds of the continent’s project capital expenditures.

Sector-wise, construction and metal products sectors saw the biggest increases in greenfield investment, while electricity and gas supply projects fell by $51 billion in value. Cross-border mergers and acquisitions, typically around 15% of Africa’s FDI, turned negative, the report declared.

The UNCTAD stated in the reports global foreign direct investment fell by 11 per cent in 2024, to $1.5 trillion. It however noted that FDI remains concentrated among a few mostly large, middle-income developing countries with 10 recipients accounting for three quarters of developing-country inflows.

Meanwhile, Developing countries accounted for vital public services at risk.nearly– and paid a record $921 billion in interests, straining budgets and putting

In the latest edition of its “A World of Debt” report series, UN Trade and Development (UNCTAD) notes that public debt in developing countries has grown twice as fast as in richer nations since 2010, growing to one third of that amount or $31 trillion of global public debt of $102 trillion in 2024.

In 2024 alone, UNCTAD reported, the developing countries paid a record $921 billion in interests, straining budgets and putting vital public services at risk.

While debt could be a powerful tool to finance infrastructure and improve lives, UNCTAD noted, it holds back economies and undermines development when it becomes too large or too costly.

It advised countries in the developing world to explore more sustainable and affordable ways to finance the future.

“In 2023, developing countries paid $25 billion more to creditors than they received in fresh debt disbursements, leading to an overall net debt outflow for years in a row. This negative trend is worsening, the report warns, as high interest rates, low global growth and rising uncertainty continue to strain public finances and make it harder to sustainably manage debt.

“In 2024, developing nations paid $921 billion in net interest on public debt, up 10% from the previous year. A record 61 developing economies spent at least 10% of their government revenues on interest payments, leaving less for critical areas like health, education and climate action,” the UN body stressed in the report.