Mauritania’s $34 billion green hydrogen project highlights Africa’s FDI drive

Foreign direct investment (FDI) flows to Africa faced a marginal decline of 3 percent in 2023, totaling $53 billion, according to the latest World Investment Report released by UNCTAD on June 20. This decline was largely influenced by Egypt and South Africa, two of the continent’s largest economies, which saw mixed FDI trends during the year.

Despite the global decline in FDI, Africa saw a notable increase in the share of global megaprojects, with six projects valued at more than $5 billion. Leading this growth was Mauritania, where a ground-breaking green hydrogen initiative has raised investments estimated to exceed $34 billion – several times the nation’s GDP.

The renewable energy sector has also attracted substantial attention, with more than $10 billion allocated to wind and solar power generation projects in Egypt, South Africa and Zimbabwe. In addition, Morocco secured a significant deal for a $6.4 billion electric vehicle battery manufacturing facility, underscoring the growing interest in electric vehicle value chains in Africa.

In terms of FDI stock, key investors in Africa include the Kingdom of the Netherlands, France, the United States of America, the United Kingdom and China, underscoring the diverse international interest in the continent’s economic opportunities.

Regional analysis revealed mixed results, with North Africa experiencing a 12% drop in FDI, Egypt and Morocco seeing reduced M&A activity despite strong performances from greenfield projects. FDI flows from West Africa fell slightly by 1%, although supported by Mauritania’s hydrogen project. Central Africa faced a steeper decline of 17%, tempered by an increase in greenfield investment, while East Africa navigated a modest 3% decline, with promising increases in greenfield and project finance activities. In South Africa, FDI inflows from South Africa fell by 43%, influenced by fluctuations in Angola.

Looking ahead, despite regional fluctuations, FDI inflows to major African groupings such as ECOWAS and SADC expanded compared to 2018 levels, reflecting continued investor confidence amid evolving economic landscapes.

These data highlight the evolving dynamics of Africa’s FDI, marked by a resilience in greenfield investments and strategic changes in regional economic strategies, poised to drive sustainable development in the coming years.

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