Policy instruments for FDI promotion in Africa

Due to the COVID-19 pandemic foreign direct Investment (FDI) is severely affected at the moment. Developing and emerging countries are likely to be hit hardest as their FDI is more concentrated in sectors particularly impacted by the pandemic such as the primary sector and manufacturing (OECD, 2020).

PEGNet Policy Brief

Global foreign direct investment (FDI) has increased substantially over the past decades and so has FDI in Africa. However, still only 3 percent of global FDI stocks and 1 percent of German FDI is located in Africa. Due to the COVID-19 pandemic foreign investment is severely affected at the moment. According to recent estimates, FDI will drop by about 30 to 40 percent this year (UNCTAD, 2020; OECD, 2020). Developing and emerging countries are likely to be hit hardest as their FDI is more concentrated in sectors particularly impacted by the pandemic such as the primary sector and manufacturing (OECD, 2020).

 

The latest PEGNet Policy Brief on "Policy Instruments for FDI Promotion in Africa" written by Saskia Mösle (IfW) and Frauke Steglich (IfW) outlines several important investment promotion instruments of both sender and recipient countries of FDI and assesses their impact.

PEGNet Policy Brief 21