UNCTAD: Egypt’s FDI inflows saw a decline of 13.7% in 2023, North Africa’s FDIs drop 12%

Cairo – June 27, 2024: Foreign direct investment (FDI) inflows to Egypt fell by 13.7 percent year-on-year to $9.8 billion, following a year of “abnormally high project values” in mergers and acquisitions (M&As), according to the latest UNCTAD World Investment Report.

FDI outflows from Egypt saw a 14 percent increase year-on-year, totaling $390 million in 2023, as per the report.

Across Africa, overall FDI inflows declined by 3 percent year-on-year to $53 billion, primarily driven by reduced investments in Egypt and South Africa.

Within North Africa, FDI inflows dropped by 12 percent throughout the year.

UNCTAD noted Egypt and Morocco as key destinations for investment, pointing to several initiatives by the government to boost its attractiveness to investors.

The report highlighted the streamlined single approval system for investment projects, the recently established Supreme Council for Investments, and investment tax credit and other fiscal incentives focused specifically on the promotion of green hydrogen.

Africa as a whole witnessed an increase in mega greenfield projects, with six projects valued at over $5 billion each.

Egypt's Suez Canal Economic Zone secured agreements totaling $10.8 billion for green ammonia and hydrogen projects, the report explained.

Despite these positive developments in specific sectors, international project finance deals in Africa saw a significant decline of 50 percent in 2023, amounting to $64 billion, it noted.

Major trends shaping FDI patterns

The report revealed several trends that will impact investment patterns.

The first trend is the long-term stagnation of global FDI, which has lagged behind global trade and GDP growth since around 2010.

Secondly, there has been a shift in cross-border investment towards services, with manufacturing FDI remaining sluggish.

Another trend is the negative growth of manufacturing FDI post-COVID-19, indicating a trend towards regionalization and deglobalization despite strong global manufacturing activities.

Investments are increasingly concentrated in services, ICT, and other high-value sectors, reshaping traditional sectoral distinctions.

Traditional differences in sectoral investment patterns between developed and developing regions are blurring, driven by the rise of asset-light FDI.