Foreign direct investment globally took a big hit in 2020, and even with a rebound underway, the blow to the African continent risks reversing progress on the Sustainable Development Goals, a United Nations expert said Thursday.
“What is worrisome is the SDGs sectors. They were seriously impacted and will take a longer time to recover,” said James Zhan, a senior director of investment at the U.N. Conference on Trade and Development. “The [COVID-19] pandemic could wipe out the development gains made over the past decade.”
Even with a partial recovery this year from the 2020 decline, FDIs will be some 25% below their 2019 level, according to UNCTAD.
Zhan, speaking at a World Bank event on foreign investment in Africa, said he was particularly concerned about achieving SDGs around water, health, and education.
Infrastructure gaps: With governments forced to take on more debt to help their economies get through the pandemic downturn, key projects that can generate long-term growth were paused.
“Large-scale infrastructure projects are being delayed and stalled,” said Ethiopis Tafara, a vice president at the Multilateral Investment Guarantee Agency, a wing of the World Bank focused on advancing FDI flows.
The new African Continental Free Trade Area offers potential upsides, but investments in infrastructure are crucial to its success, said Cheryl Buss, the chief executive officer at Absa International. Some $100 billion is needed annually, she estimated, and it would “stimulate other sectors.”
An upside — but in oil: Senegal is seeing positive investment trends in the fossil fuel sector, according to Amadou Hott, the country’s economy minister.
“In Senegal, we managed to increase FDIs thanks to the energy sector — in particular, the investments in oil and gas,” he said. Hott’s statement reflects the challenges of moving to a greener future amid the pull of short-term economic gains from investments causing pollution.
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► Development banks put on strained show of unity on climate, SDGs (Devex Pro)
About the author
Shabtai Gold
Shabtai Gold is a Senior Reporter based in Washington. He covers multilateral development banks, with a focus on the World Bank, along with trends in development finance. Prior to Devex, he worked for the German Press Agency, dpa, for more than a decade, with stints in Africa, Europe, and the Middle East, before relocating to Washington to cover politics and business.