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

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.

Thu, 18 Jun 2020 12:39:37 GMT

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AI Generated Summary

Global FDI flows are projected to decline by up to 40% in 2020, marking the first time since 2005 that global FDI will fall below 1 trillion dollars.
Nigeria and other African countries are expected to bear the brunt of the FDI decline, with challenges in the operating environment and ease of doing business posing significant obstacles to attracting investments.
Recommendations to stimulate FDI inflows into Nigeria include improving the ease of doing business, addressing corruption, enhancing governance, increasing access to capital, and investing in infrastructure, healthcare, and education.

Global Foreign Direct Investment (FDI) flows are facing a significant decline in 2020, with projections indicating a decrease of up to 40% from the 2019 value of $1.54 trillion. This drop will mark the first time since 2005 that global FDI will fall below 1 trillion dollars, as highlighted in a recent report by the United Nations Conference on Trade and Development (UNCTAD). Niyi Falade, CEO of Crusader Sterling Pensions, discussed key drivers, impacts, and recommendations in a recent interview on CNBC Africa. Falade emphasized the urgency of the situation, stating that the report's projections for 2020 paint a grim picture for global FDI. The report underscores the varying regional impacts of the FDI decline, with Africa, particularly Nigeria, set to bear a significant brunt. Among the key factors influencing FDI trends are economic growth, market size, and the operating environment. For Nigeria, the decline in FDI flows has been notable in recent years, with West Africa experiencing a sharp 21% drop attributed to Nigeria's struggles in attracting investments due to challenges in the operating environment. Falade pointed out that Nigeria's low ranking on the ease of doing business index is a clear indication of the obstacles faced by entrepreneurs in the country. Addressing the need to stimulate FDI inflows into Nigeria, Falade recommended a multi-faceted approach. He highlighted the importance of improving the ease of doing business, addressing corruption, enhancing governance, and increasing access to capital. Additionally, he stressed the need for investment in infrastructure, healthcare, and education to boost the country's human development index. While acknowledging some positive steps taken by the Nigerian government to enhance the business environment, Falade emphasized the importance of continued reforms to attract investors and facilitate FDI growth. Learning from countries like Egypt, which saw an improvement in FDI inflows in 2019, Nigeria can prioritize reforms and policies that promote a favorable investment climate. In conclusion, the challenges posed by the global decline in FDI underscore the critical need for developing economies like Nigeria to prioritize structural reforms and policy initiatives that can attract investments, drive economic growth, and foster sustainable development in the long term.