Ghana: FDI value dip by 39% in 2022
A recent report by investment advisory firm Bridgewater, has disclosed a significant 39% drop in Foreign Direct Investment (FDI) inflows to Ghana in 2022. This decline is attributed to a combination of factors, including a stagnant landscape for greenfield projects and reduced activity in international project finance and mergers and acquisitions deals.
The economic slowdown and a challenging business environment are cited as primary drivers of this FDI reduction. Notably, the first half of 2023 also saw a considerable decrease in investments, with only 72 projects securing FDI worth $229.82 million, compared to 125 projects with a value of $343.83 million during the same period in 2022. This represents a substantial 33% drop in investments for the first half of 2023.
The report underscores the persisting economic challenges in Ghana, with full recovery not anticipated until 2025. It also highlights the critical role of FDI in job creation, although many projects are concentrated in the capital and primarily focused on the services and manufacturing sectors.
China maintained its position as Ghana’s leading source of FDI, surpassing Europe and America. Within Africa, Mauritius, South Africa, and Nigeria are identified as key sources of intra-African investment for Ghana.
As global policymakers gear up for the World Investment Forum 2023, with a focus on sustainable energy, Bridgewater recommends exploring affordable financing options for developing countries, transforming risk-taking models, and encouraging public-private partnerships to facilitate progress in FDI.
The report expands its scope to provide an overview of FDI trends in Africa, noting that FDI inflows in 2022 dropped to 2019 levels, amounting to $45 billion, with an interesting emphasis on increased greenfield projects. North Africa remained the largest recipient of FDI on the continent, securing a 33% share of total FDI inflows in Africa for 2022. These findings shed light on the evolving landscape of FDI in the region amidst macroeconomic headwinds and geopolitical tensions.
