Greenfield FDI Declines In Africa

Greenfield investment declined in Africa by 9.6 percent from $94 billion in 2016 to $84 billion in 2017. According to Investopedia, greenfield investment is a type of foreign direct investment (FDI) where a parent company builds its operations in a foreign country from the ground up. According to WIR, the services sector keeps dominating although its share of total greenfield FDI reduced from  76 percent to 63 percent. the total greenfield FDI going to the sector declined from $71 billion to $54 billion, representing a 24 percent decline.

Investment in the mining, quarrying, and petroleum sector increased by almost three folds from $3.7 billion to $10.6 billion. A similar triple-fold increase occurred in the nonmetallic mineral product sector from $1.1 billion to $3 billion. The electricity and mineral sectors also saw increased greenfield investment.

However, the automobile, construction, transport, and business service sector witnessed a significant decline. Greenfield FDI in the automobile sector declined from $2.8 billion to $ 1.5 billion representing a 46 percent decline. In the construction sector, greenfield FDI declined from $16.3 billion to $ 6.5 billion representing a 60 percent decline. Greenfield FDI in the transport sector declined from $12.9 billion to $ 3.2 billion representing a 75 percent decline. In the business sector, greenfield FDI declined from $22.7 billion to $ 3.1 billion representing an 86 percent decline.

Greenfield FDI outflow from Africa declined by 51 percent from $11.8 billion to $5.8 billion. Outflow from the manufacturing industry slightly exceeded the outflow from the services industry, however both sectors experienced a decline in Greenfield FDI outflow. The chemical sector accounted for the largest Greenfield FDI outflow of $ 1.2 billion representing 21 percent of total Greenfield FDI outflow from Africa.

Announced Greenfield FDI projects by Industry, 2016-2017 ($Million) Source: UNTCAD World Investment report
Foreign direct investment in Sub-Saharan Africa and selected African countries. Source: World Bank’s World Development Indicators.

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