UNCTAD’s World Investment Report 2023 has shown that Foreign Direct Investment (FDI) in the 32 landlocked developing countries (LLDCs) as a group rose by 6 percent to $20 billion in 2022.
The top five recipients were Kazakhstan, Ethiopia, Uzbekistan, Mongolia and Uganda, in that order. Meanwhile, flows to LLDCs in Africa, Asia and Europe increased, while those to LLDCs in Latin America and the Caribbean fell.
In Africa, Ethiopia remained the second largest LLDC recipient, despite a decline in inflows. FDI in Uganda increased by 39%, to US$1.5 billion owing to large projects in extractive industries. Flows to Niger declined slightly to US$581 million, but international project finance activity increased.
The two Latin American LLDCs saw contrasting trends. Flows to Bolivia turned negative again (-$26 million), mainly due to the extraordinary payment of dividends in the hydrocarbon sector. However, other economic sectors showed increased investment. In Paraguay, inflows more than doubled to US$474 million.
Among the LLDCs in developing Asia, Kazakhstan saw FDI increase by 83% to US$6.1 billion. While equity turned negative, reinvested earnings reached US$10 billion – the highest value ever recorded – boosted by high profits in the extractive industries.
Flows to Uzbekistan reached a record US$2.5 billion, mostly due to the doubling of reinvested earnings to US$1.2 billion. Payment of dividends in the extractive industries caused FDI flows to Azerbaijan to turn negative to -US$4.5 billion.
However, in terms of sub-regions in 2021, Southern Africa, East Africa and West Africa saw their investment flows rise while those to Central Africa remained flat and North Africa registered a decline.
While most Africa countries saw a moderate rise in FDI in 2021, around 45% of the total was due to an intrafirm financial transaction in South Africa.
Greenfield Project Announcements Increase
Looking at the LLDCs as a group, the number of greenfield project announcements increased by 15% and the value tripled, to $31 billion. The increase was particularly pronounced in extractive industries.
The number of international project finance deals was 19% lower than in 2021, and the value plummeted by 72%, to $19 billion. The majority of projects targeted renewables, but projects were also announced in power, mining and industrial real estate.
FDI to LLDCs originates mostly from a few key investor countries. With $20 billion, China was by far the largest investor in 2021 (with $7.5 billion in Kazakhstan alone), followed by Thailand, Canada and the Netherlands.
The United Nations Conference on Trade and Development (UNCTAD) promotes inclusive and sustainable development through trade, investment, finance, and technology. UNCTAD’s World Investment Report is a leading publication that provides analysis and insights into global investment trends and policies.
World Investment Forum
The key findings of the World Investment Report 2023 will inform discussions at UNCTAD’s 8th World Investment Forum to be held in Abu Dhabi from 16 to 20 October 2023 under the theme “Investing in sustainable development”.
The forum will bring together government leaders, global CEOs, policymakers and other stakeholders to find solutions and reach consensus on priority issues. Its outcomes will feed into negotiations at the annual climate summit COP28, which will also be held in the United Arab Emirates.
Meanwhile, investment flows to Africa reached a record $83 billion in 2021. Despite the strong growth, investment flows to Africa accounted for only 5.2% of global FDI, up from 4.1% in 2020.
The largest holders of foreign assets in Africa remained European, led by investors in the United Kingdom ($65 billion) and France ($60 billion).
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