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MONEY: Foreign Direct Investments (FDI) to East Africa dropped to $6.5 billion (Sh700 billion), a 16 per cent decline from the $7.7 billion (Sh830 billion) achieved in 2019.

The latest United Nations Conference on Trade and Development report (Unctad) report notes that the inflows fell largely because of the Covid-19 pandemic.

Only the Central African region’s FDI inflows increased, supported by increased inflows to the Republic of Congo even as Unctad said it expects global inflows to partiallyrecover in 2021 by between 10 per cent to 15 per cent. Unctad notes that Ethiopia accounted for more than a third of investments to East Africa, despite registering a 6 per cent reduction in inflows. 

Like Kenya and Uganda, Ethiopia’s inflows were spared further severity because of their status as a non-commodity dependent nation, unlike Eritrea, Burundi, and Tanzania which depend on commodities.

During the period in review, inflows into Central Africa rose to $9.2 billion (Sh991 billion) from $8.9 billion (Sh959 billion) in 2019.

Continental scene

On the continental scene, Unctad said FDI inflows fell by $7 billion (Sh754 billion) in 2020, from $40 billion (Sh4.3 trillion) at the end of 2020, compared to $47 billion (Sh5 trillion) at the end of 2019.

Although Unctad forecasts FDI in Africa to grow in 2021, a tepid economic recovery and slow vaccine roll-out programme threaten the scale of the investment recovery.

FDI to the continent is projected to grow by only 5 per cent in 2021, lower than both the global and developing country projected growth rates. 

“Despite projections for only a weak investment recovery, there are some mitigating factors that signal FDI picking up momentum by 2022 and returning to pre-pandemic levels,” Unctad’s director of investment and enterprise, James Zhan (pictured) said.             – Noel Wandera