Foreign direct investment (FDI) inflows to Egypt fell by 13.7 percent to $9.8 billion in 2023, following a year of high project values in mergers and acquisitions (M&As). According to the latest UNCTAD World Investment Report, FDI outflows from Egypt rose 14 percent annually to $390 million in 2023.
In Africa, total FDI inflows saw a 3 percent decline year-on-year to $53 billion, primarily due to a decline in investments in Egypt and South Africa. In North Africa particularly, FDI inflows saw a 12 percent decline last year.
Government initiatives propel investment landscape
The UNCTAD World Investment Report highlights Egypt and Morocco as key North African destinations for investment due to the several initiatives their governments have implemented to boost the investment landscape. The report shed light on the streamlined single approval system for investment projects in Egypt, the new Supreme Council for Investments, and the investment tax credit among other fiscal incentives that focus particularly on the promotion of green hydrogen.
Key projects
A major FDI push in Africa is the increase in mega greenfield projects with six projects each at a value of over $5 billion. Notably, Egypt’s Suez Canal Economic Zone secured agreements amounting to $10.8 billion for green ammonia and hydrogen projects.
Despite positive developments in certain sectors, international project finance deals in Africa saw a significant decline of 50 percent in 2023, amounting to $64 billion, stated the UNCTAD report.
Read: Egypt fulfills $25 billion debt obligations, representing 7 percent of GDP: IIF
Global FDI trends
The decline and stagnation of FDI inflows was not limited to Africa or Egypt alone. Global FDI has been lower than global trade and GDP growth for over 10 years now. In addition, cross-border investment has shifted in recent years to the service sector while manufacturing FDI remained slower.
Post-pandemic, manufacturing FDI saw negative growth signaling a rising trend in regionalization and deglobalization despite strong global manufacturing activities. Another major trend the world has witnessed is the increasing concentration of investments in services, ICT, and other high-value sectors.
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