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UNCTAD report: FDI In Africa Declines In 2023 Amid Clean Energy Gains

A RECENT report by the United Nations Conference on Trade and Development (UNCTAD) reveals that foreign investment flows to Africa saw a slight decline in 2023. Despite this overall drop, significant investments in the clean energy sector emerged as a positive highlight.

The value of international project finance deals in Africa plummeted by 50 percent to $64bn, following a 20 percent decline in 2022. However, the continent witnessed an increase in global greenfield megaprojects, with six projects each valued at over $5bn, according to the World Investment Report.


A standout project was a green hydrogen initiative in Mauritania, one of the least developed countries in Northwest Africa. This project is set to generate $34bn in investment, significantly surpassing Mauritania’s GDP. Additionally, Africa received more than $10bn in project finance for wind and solar energy production, with major projects located in Egypt, South Africa, and Zimbabwe.

The electric vehicle sector also saw substantial foreign investment, with a notable $6.4bn deal for an electric vehicle battery manufacturing facility in Morocco. The main foreign investors in the continent, by direct investment stock, include the Netherlands, France, the US, the UK, and China.

In North Africa, foreign investments dropped by 12 percent. Egypt experienced a decrease in mergers and acquisitions compared to the highs of 2022, while Morocco saw reduced FDI inflows but excelled in attracting greenfield projects.

West Africa’s FDI flows fell by 1 percent, with the region’s performance heavily influenced by the $34bn green hydrogen project in Mauritania. Even excluding this outlier, greenfield investment values tripled, and the number of projects remained stable.

Central Africa experienced a 17 percent decline in FDI. Despite a 56 percent increase in greenfield projects and a 119 percent rise in their value, the region was adversely affected by a downturn in international project finance deals.

East Africa saw a 3 percent decrease in FDI inflows, mainly due to an 11 percent drop in Ethiopia. However, the region noted more than a 30 percent increase in greenfield projects and international project finance deals, indicating better future prospects.

Southern Africa’s investment trends continued to be influenced by fluctuations in Angola. Inflows to South Africa decreased by 43 percent, despite increased mergers and acquisitions activity.

Compared to 2018, FDI inflows have grown for all major regional groupings, most notably the Economic Community of West African States (ECOWAS) and the Southern African Development Community (SADC).

This report underscores the mixed performance of foreign investments across Africa, with clean energy projects providing a bright spot amid broader economic challenges.

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