Ghana beats Nigeria as largest FDI receiver in West Africa – UNCTAD
Ghana received the largest amount of foreign direct investment (FDI) in West Africa beating Nigeria, with $3 billion in investments, according to the World Investment Report 2019.
“Nigeria is no longer the largest FDI recipient in West Africa. Foreign investors may have adopted a cautious approach and withheld planned investments in light of the risk of instability associated with Nigeria’s elections and disputes between the government and some large multinational enterprises (MNEs). In 2018, both HSBC (United Kingdom) and UBS (Switzerland) closed their local representative offices in the country, and the telecommunication giant, MTN (South Africa) remained embroiled in litigation related to the repatriation of profits,” the report released last week said.
Inward FDI to Nigeria declined 43 per cent to $2 billion.
The report which was emailed to ghanabusinessnews.com, however indicated that, Ghana’s FDI inflows decreased by 8 per cent in 2018, a little lower than what the country received in amounts of $3.3 billion in 2017.
According to the report, most of the FDI is oriented towards gas and minerals, with the largest greenfield investment project coming from Eni Group, a multinational oil and gas company, which is set to expand the Sankofa gas fields.
Additionally, the acquisition by Gold Fields Ltd (South Africa) of a 50 per cent share in Asanko Gold Ghana Ltd, a Greater Accra-based gold mine operator, for $185 million, was the largest mergers and acquisitions, the report added.
The country may have experienced a slight contract in 2018, however as reported for the country’s 2017 performance, Ghana’s diversified economy has facilitated a continuous increase in its FDI flows since the 2000s.
While indicating that global foreign direct investments have fallen for the third time, the report said, however, Africa has experienced a different wave. This is because FDI flows to Africa have risen by 11 per cent to the tune of $46 billion.
The increase, the report says, was supported by continued resource-seeking inflows, some diversified investments and a recovery in South Africa after several years of low-level inflows.
The global fall however, was due to large scale repatriation of foreign earnings by United States multinational enterprises in the first two quarters of 2018 and tax reforms introduced at the end of 2017 in that country.
In May this year, the African Continental Free Trade Agreement entered into force. The Agreement, which will create the African Continental Free Trade Area, is said to create a single continental market for goods and services, which eventually allows free movement of business persons and investments.
The United Nations Conference on Trade and Development (UNCTAD) believes the AfCFTA could boost FDI inflows for 2019.
“The African Continental Free Trade Area (AfCFTA) agreement will bolster regional cooperation. This, along with upbeat growth prospects, augurs well for FDI flows to the continent,” Mukhisa Kituyi, UNCTAD Secretary-General was quoted as saying.
By Asabea Akonor & Gifty Danso
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