Anew United Nations Conference on Trade and Development( UNCTAD) report shows Foreign direct investment (FDI) flows to the
Global South 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 9% to $841 billion in 2023, according to UNCTAD’s latest Global Investment Trends Monitor.
Developing countries in Asia felt the brunt of the decline, registering a 12% drop, while flows to Africa and Latin America and the Caribbean 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 3% 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.
Strikingly, when these conduit economies are excluded, global FDI flows show a steep 18% 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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