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<p>Ethiopia registered more than $2 billion in foreign direct investment inflows in the first nine months of 2020/2021, according to the Ethiopian Investment Commission. This is an increase of 6.7 per cent compared to the same period last year. Economic Analyst, Samuel Getachew joins CNBC Africa for more.</p>


Ethiopia registers $2bn in FDI in the first nine months

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<p>According to UNCTAD’s 2020 world investment report, foreign direct investment inflows to Somalia reached about $447 million in 2019, up from $408 million in 2018. FDI stock amounted to $3.1 billion in 2019. However, instability in the country remains a major concern. Mohamed Dubo, Director of the Somalia Investment Promotion Office at the Ministry of Planning, Investment, and Economic Development joins CNBC Africa for more.</p>


SOMINVEST Director

SOMINVEST Director, Dubo on what makes Somalia attractive to foreign investors

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<p>With some of the economies in the region planning to reopen up, the need for foreign direct investment to jumpstart the economies will be vital for growth. So how best can economies attract this investment? CNBC Africa spoke to the Managing Director of CFIUS Partners, Harry Broadman for more.</p>


COVID-19: How can EAC countries attract more foreign investment to aid recovery?

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<p>On the side-lines of the 2021 Lagos State Investment Summit, the Vice President of Corporate and Government Relations at Olam International, Ade Adefeko, says the company is regrouping to take advantage of the opportunities in the market, with over two-billion-dollars&#8217; worth of investments in Nigeria. He discussed this with CNBC Africa’s Esther Awoniyi.</p>


#LagosEconomicSummit2021: Olam regrouping for opportunities in the market

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<p>For the U K government, bringing in more British foreign direct investment to help Lagos state grow, create jobs, and expand is key. That’s according to the Deputy High Commissioner of the British High Commission in Lagos, Ben Llewellyn-Jones. He discussed this with CNBC Africa’s Esther Awoniyi on the side-lines of the 2021 Lagos State Economic Summit.</p>


#LagosEconomicSummit2021: Llewellyn-Jones on how to make Lagos more attractive to UK investors

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<p>Rwanda and Qatar have signed double taxation avoidance agreement, agreeing to halt double taxation of incomes from Foreign Direct Investment inflows, among others. Rwanda’s Ambassador to Qatar, Francois Nkulikiyimfura spoke to CNBC Africa for more.</p>


Rwanda

Rwanda, Qatar sign agreement to avoid double taxation

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<p>The total capital imported into Nigeria declined by 59.6 per cent to $9.68 billion in 2020. This is the lowest level of capital importation in four years, according to the National Bureau of Statistics.  Meanwhile, the United Nations Conference on Trade and Development says Nigeria attracted $2.6 billion worth of investments in 2020, which was lower than the $3.3 billion recorded in 2019. Kyari Bukar, Former Chairman of the Nigerian Economic Summit Group joins CNBC Africa for more.</p>


2021: What’s holding back FDI into Nigeria?

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<p>The Economist Intelligence Unit has reported that foreign direct investment flows into Sub-Saharan Africa will fall by 30 per cent this year, with oil and gas producers facing the biggest knock. Pat Thacker, Editorial Director of India, Middle East &#038; Africa at the Economist Intelligence Unit joins CNBC Africa for more.</p>


EIU forecasts 30% decline in FDI flows into SSA in 2020

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<p>The Democratic Republic of Congo lifted the nationwide state of emergency that was declared in March to curb the spread of COVID-19, after seeing a slowdown in the number of new infections and deaths.  The pandemic is expected to trigger an economic recession, projected at negative 2.2 per cent in 2020, stemming from weaker exports caused by the global economic downturn. Economic Analyst, Al Kitenge joins CNBC Africa for more.</p>


COVID-19: How the pandemic has impacted the DRC’s growth outlook

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<p>According to EAC Trade and Investment report, intra-EAC trade stood at $5.98 billion in 2018 however, with the unprecedented impact of COVID-19 pandemic on the economy, regional trade is expected to decline by 50 per cent this year. The re-opening of regional air transport services is expected to integrate the regional logistics value chains for increased exports of fresh produce, regional tourism and enable service providers to tap into the larger EAC market. Peter Mithuki, Executive Director and CEO of East African Business Council joins CNBC Africa to discuss what can be done to have a coordinated approach on the resumption of regional air services to spur intra-EAC trade.</p>


EABC on how to streamline the resumption of air services in East Africa

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<p>The latest World Investment Report 2020 by the United Nations Conference on Trade and Development indicate that FDIs in East Africa declined by 9 per cent to $7.8 billion in 2019 from $9 billion in 2018. There could be a sharp decline in FDIs this year as the COVID-19 pandemic continues to ravage economies across the globe. Oscar Emasu, Research Analyst at Crested Capital joins CNBC Africa for more.</p>


How the COVID-19 is impacting foreign direct investment into East Africa

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<p>Global Foreign Direct Investment flows will decline by up to 40 per cent in 2020, from their 2019 value of $1.54 trillion, meaning that for the first time since 2005 global FDI will fall below 1 trillion dollars. This is contained in a recent report by the United Nations Conference on Trade and Development. The report also projects a further 5 to 10 per cent decrease in global FDI in 2021. Niyi Falade, CEO of Crusader Sterling Pensions joins CNBC Africa for more.</p>


UNCTAD: Global FDI to fall below $1trn first time since 2005

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<p>With a 25 per cent to 40 per cent forecast decline in foreign direct investment to Africa, different countries in the region will be looking to reposition themselves to take full advantage of the low FDI flows as a source of revenue that has been hit by the COVID-19 pandemic. Meanwhile, Ministers from the ECOWAS region are calling for a coordinated plan to re-open cross border trading. Sam Chidoka, Managing Director and CEO of Kairos Capital joins CNBC Africa for more.</p>


Repositioning Nigeria for investment amid COVID-19

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Kenya&#8217;s energy watchdog has cut retail electricity prices for large manufactures in a bid to make the country more competitive for FDIs when compared to other African countries. Investment Analyst, Rodney Omukhulu joins CNBC Africa&#8217;s Arnold Kwizera for more.</p>


Kenya cuts retail electricity prices in bid to attract foreign direct investment

By <span><a href="https://theconversation.com/profiles/muazu-ibrahim-966673">Muazu Ibrahim</a>, <em><a href="https://theconversation.com/institutions/university-for-development-studies-3706">University for Development Studies</a></em></span>

<p>Economic growth is driven by a number of factors. These include foreign direct investment, national savings, household spending, fiscal and monetary policies. Since the late 1980s African governments have fully embraced foreign direct investment as a major driver of growth. </p>

<p>One of the avenues through which countries have sought to attract more foreign direct investment has been investment summits. These are hosted jointly with developed countries. They include the <a href="https://www.odi.org/blogs/10674-focac-2018-what-expect-next-weeks-china-africa-summit">Africa-China Investment Summit</a>, <a href="https://www.un.org/africarenewal/news/first-uk-africa-investment-summit-signals-post-brexit-plans-continent">Africa-UK Investment Summit</a> and the <a href="https://www.businessghana.com/site/news/business/199915/2020-U-S-Africa-Business-Summit-to-be-Hosted-in-Morocco">Africa-US Investment Summit</a>.</p>

<p>Despite these efforts, <a href="https://unctad.org/en/PublicationsLibrary/wir2019_en.pdf">data</a> shows that Africa has not been a major <a href="https://data.worldbank.org/indicator/BX.KLT.DINV.WD.GD.ZS?locations=ZG">recipient</a> of these flows. In fact, it attracts a lot less than other developing countries. </p>

<p>There’s a bigger problem too – the impact on economic growth of the foreign direct investment the continent attracts is lower than other comparable parts of the world. In <a href="https://www.tandfonline.com/doi/full/10.1080/20430795.2019.1683504">our research</a> we set out to understand why. To do this, we looked at the financial services sector which is underdeveloped in most African countries.</p>

<h2>The search</h2>

<p>We examined <a href="https://www.tandfonline.com/doi/full/10.1080/20430795.2019.1683504">data</a> from 45 countries between 1980 and 2016. The variables we looked at included economic growth, foreign direct investment, financial sector development, human capital, government expenditure and gross fixed capital formation. </p>

<p>The countries were selected based on data availability. They comprised several countries from all the regional blocs, including six countries from Northern Africa.</p>

<p>Overall, the countinent’s financial sector is under-developed compared to other emerging economies, with the exception of South Africa which is relatively well-developed. The countries’ financial sectors are bank-based, thus providing limited space for the equity (capital) markets. </p>

<p>We sought to examine the relationship among three factors: foreign direct investment, economic growth, and financial sector development. Financial sector development measures a country’s financial institutions to make financial services available to citizens. It also includes the provision of finance to businesses.</p>

<p>There has been a lot of economic literature on the impact of foreign direct investment on economic growth. And there have been many <a href="https://www.researchgate.net/publication/266079304_FOREIGN_DIRECT_INVESTMENT_FINANCIAL_SECTOR_DEVELOPMENT_ECONOMIC_GROWTH_EMPIRICAL_EVIDENCE_ON_LINKS_FROM_GHANA_INTRODUCTION">studies</a> on the linkages between foreign direct investment, financial sectors and economic growth. But less has been done on the extent to which Africa’s financial sector is a conduit through which foreign direct investment drives economic growth.</p>

<p><a href="https://www.mdpi.com/1911-8074/12/4/176/pdf">Research</a> findings on the impact of foreign direct investment on a country’s economic growth are mixed. This implies that the extent of the impact is determined by other <a href="https://www.researchgate.net/publication/325657823_The_Impact_of_Foreign_Direct_Investment_on_Economic_Growth_a_Causal_Study_in_the_United_States">factors</a> and characteristics of a country’s economy. </p>

<p>That’s why we chose to look at how the financial sector, in particular its stage of development, can moderate the impact of foreign direct investment on economic growth.</p>

<h2>What attracts foreign direct investment</h2>

<p>For the most part, foreign direct investment inflows to Africa have generally been attributed to five factors. These are regulations (ease of doing business), the general investment climate, broader economic reforms, information communication and technology development, and improvements in infrastructure.</p>

<p>Foreign direct investment plays an important role in economic development. It provides financial resources, technological spillovers and improvement in human capital. These are all critical factors that can spur Africa’s economic development by addressing infrastructural deficits and reducing unemployment. </p>

<p>The effect of foreign direct investment on economic growth is well documented globally. Funds from foreign investors are channelled through a country’s financial system before being allocated to the targeted beneficiary of the investment. </p>

<p>In Africa’s case we <a href="https://www.tandfonline.com/doi/full/10.1080/20430795.2019.1683504">found</a> that the continent’s underdeveloped financial sector has dampened the impact of foreign direct investment on economic growth. </p>

<p>To measure financial sector development we calculated credit provided by the financial sector to the private sector as a percentage of GDP. On this measure, Africa’s financial sector fails to allocate financial resources effectively and efficiently to the productive sectors of the economy. </p>

<p>When the financial sector does allocate resources, it invests in risky projects. The net effect is that it hurts economic growth and therefore fails to support foreign direct investment.</p>

<h2>What’s to be done</h2>

<p>Foreign direct investment inflows to Africa are increasing, albeit marginally. What our study shows is that African governments need to spend more effort on maximising the impact of foreign direct investment on economic growth. This is over and above current efforts to gain a bigger share of global foreign direct investment flows. Failure to raise the impact of foreign direct investment on economic growth will mean that African countries will not fully benefit from higher inflows.</p>

<p>Improving the performance of the financial sector should be one of the major preoccupations of African policymakers. This should include regulators improving their supervisory roles. And they should strengthen the financial sector’s ability to allocate resources effectively to the productive sectors of the economy. Improvements in corporate governance and risk management strategies would also help.</p>

<p><em>This article was co-authored with Abraham Mensah Acquah. He holds BA (Integrated Business Studies) and a Master of Commerce degree in Banking and Finance from the School of Business and Law, University for Development Studies, Wa, Ghana.</em><img loading="lazy" decoding="async" src="https://counter.theconversation.com/content/131856/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1" style="border: none !important; box-shadow: none !important; margin: 0 !important; max-height: 1px !important; max-width: 1px !important; min-height: 1px !important; min-width: 1px !important; opacity: 0 !important; outline: none !important; padding: 0 !important; text-shadow: none !important" /></p>

<p><span><a href="https://theconversation.com/profiles/muazu-ibrahim-966673">Muazu Ibrahim</a>, Lecturer, Department of Banking and Finance, <em><a href="https://theconversation.com/institutions/university-for-development-studies-3706">University for Development Studies</a></em></span></p>

<p>This article is republished from <a href="http://theconversation.com">The Conversation</a> under a Creative Commons license. Read the <a href="https://theconversation.com/african-countries-arent-getting-as-much-as-they-should-from-foreign-direct-investment-131856">original article</a>.</p>

Wikimedia Commons_Foreign Direct Investment

Why African countries aren’t getting as much as they should from foreign direct investment

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<p>The Chairman of Nigerians in Diaspora Commission; Abike Dabiri-Erewa says the idea behind the Nigerian Diaspora Summit is to ensure that Nigerians in the diaspora are the first point of contact for Foreign Direct Investment. She highlighted programs in place to bridge the gap between Nigerians in Diaspora, those back home and the government. She joins CNBC Africa&#8217;s Christy Cole on the side-lines of the Nigerian Diaspora Investment Summit.</p>


What Nigeria is doing to tap into diaspora investment for growth

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<p>Ethiopia pipped Kenya last year as the largest recipient of Foreign Direct Investment (FDI) within the East African region, according to a new report released by financial consulting firm Ernst and Young. Ethiopia attracted $7 billion compared to Kenya&#8217;s $2 billion. On the reforms that are making Ethiopia a top investment destination, Global Chairman of Fairfax Africa Fund, Zemedeneh Negatu joins CNBC Africa&#8217;s Arnold Kwizera for more.</p>


foreign direct investment

Ethiopia registers $2bn in FDI in the first nine months

SOMINVEST Director, Dubo on what makes Somalia attractive to foreign investors

COVID-19: How can EAC countries attract more foreign investment to aid recovery?

#LagosEconomicSummit2021: Olam regrouping for opportunities in the market

#LagosEconomicSummit2021: Llewellyn-Jones on how to make Lagos more attractive to UK investors

Rwanda, Qatar sign agreement to avoid double taxation

2021: What’s holding back FDI into Nigeria?

EIU forecasts 30% decline in FDI flows into SSA in 2020

COVID-19: How the pandemic has impacted the DRC’s growth outlook

EABC on how to streamline the resumption of air services in East Africa

How the COVID-19 is impacting foreign direct investment into East Africa

UNCTAD: Global FDI to fall below $1trn first time since 2005

Repositioning Nigeria for investment amid COVID-19

Kenya cuts retail electricity prices in bid to attract foreign direct investment

Why African countries aren’t getting as much as they should from foreign direct investment

What Nigeria is doing to tap into diaspora investment for growth

Ethiopia beats Kenya to top FDI destination in East Africa

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foreign direct investment

Ethiopia registers $2bn in FDI in the first nine months

SOMINVEST Director, Dubo on what makes Somalia attractive to foreign investors

COVID-19: How can EAC countries attract more foreign investment to aid recovery?

#LagosEconomicSummit2021: Olam regrouping for opportunities in the market

#LagosEconomicSummit2021: Llewellyn-Jones on how to make Lagos more attractive to UK investors

Rwanda, Qatar sign agreement to avoid double taxation

2021: What’s holding back FDI into Nigeria?

EIU forecasts 30% decline in FDI flows into SSA in 2020

COVID-19: How the pandemic has impacted the DRC’s growth outlook

EABC on how to streamline the resumption of air services in East Africa

How the COVID-19 is impacting foreign direct investment into East Africa

UNCTAD: Global FDI to fall below $1trn first time since 2005

Repositioning Nigeria for investment amid COVID-19

Kenya cuts retail electricity prices in bid to attract foreign direct investment

Why African countries aren’t getting as much as they should from foreign direct investment

What Nigeria is doing to tap into diaspora investment for growth

Ethiopia beats Kenya to top FDI destination in East Africa

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