Decline in foreign direct investment in Algeria

Foreign direct investment (FDI) in Algeria declined drastically in 2021. Indeed, Algeria attracted less FDI in 2021, according to the report of the United Nations Conference on Trade and Development (Unctad) regarding investments in the world during the last year. Last year, FDI inflows into Algeria reached 870 million against $1.14 billion in 2020.

In North Africa, apart from Morocco, where FDI inflows increased from $1.4 billion in 2020 to $2.1 billion in 2021, other countries saw their FDI inflows decline. For Egypt, foreign direct investment inflows fell from $5.8 billion in 2020 to $5.1 billion last year, a decrease of 12%. Despite this decline, Egypt remained the second largest recipient of FDI in Africa. FDI inflows to Tunisia remained stable at $660 million in 2021 and $652 million in 2020.

However, according to this UNCTAD report, FDI inflows into Africa reached a record $83 billion in 2021. This inflow represents double the total recorded in 2020, when the COVID-19 pandemic put a heavy burden on investment flows to the continent. This figure is still the lowest in comparison to FDI globally. “Despite this strong growth, investment inflows to Africa account for only 5.2% of global FDI, compared to 4.1% in 2020,” the report said.

Europeans are the largest holders of foreign assets in Africa

The report also indicates that Europeans remained the largest holders of foreign assets in Africa, led by investors from the United Kingdom ($65 billion) and France ($60 billion). New investments have been low, but renewable energy projects on the African continent have increased. “Despite the overall positive trend in FDI on the continent, total new project announcements remained low at $39 billion, showing only a modest recovery from the $32 billion recorded in 2020 – and well in progress. The $77 billion recorded in 2019 below”, underlines the report, which adds: “At the same time, the number of international projects in renewable energy in Africa has increased to 71 – almost double the 36 recorded in 2011”.

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This report therefore confirms the data from the Bank of Algeria published at the beginning of the current year. This economic report on monetary and financial trends in the first half of 2021 indicated that foreign direct investment (FDI) inflows into Algeria fell during the first half of 2021. This inflow reached $403 million against $504 million in the same period a year. First, 20% down.

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About the Author: Forrest Morton

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