Egypt positioned first in North Africa for foreign direct investment (FDI) inflows in 2022, obtaining a total of $11.4 billion, which was the greatest amount since 2017, according to the United Nations Conference on Trade and Development (UNCTAD).
According to UNCTAD’s World Investment Report 2023, which was released on Wednesday, Egypt’s total FDI outflows in 2022 amounted to $342 million, a slight decrease from the $367 million recorded in 2021.
According to a research issued in May by the American global management consulting company Kearney, Egypt placed 14th among the world’s most attractive and trustworthy developing countries for foreign investments, overtaking Turkey, Morocco, South Africa, and Russia.
These measures are being implemented in accordance with Egypt’s $3 billion loan agreement with the IMF, which requires the government to reduce its involvement in the local economy to create more space for private sector activity.
The report disclosed that investments in SDGs sectors increased in developing countries in 2022, with infrastructure, energy, water and sanitation, agrifood systems, health, and education sectors seeing a growth in project numbers.
“But the increase since the SDGs were adopted in 2015 is relatively modest due to weak growth in the early years and the sharp decline in investment during the COVID-19 pandemic,” said the report.
Despite an increase in investments in SDG sectors in developing countries, figures from the research show that the yearly investment gap in these nations has increased to $4 trillion in 2022 from $2.5 trillion in 2015. The energy industry alone requires $2.2 trillion each year, accounting for more than half of the total.
“The widening SDG investment gap in developing countries stands in contrast to positive trends observed in sustainability investment in global capital markets. The sustainable finance market grew 10 percent to $5.8 trillion in 2022”, the report explained.
According to study data, developing countries received just $544 billion in renewable energy investments in 2022, despite a demand for approximately $1.7
Moreover, more than 30 developing countries have no major foreign investment projects in renewables through 2022.
Furthermore, renewable energy investment represents for just one-tenth to one-third of total FDI in the top 10 emerging countries with the highest levels of renewable energy investment.
“Although renewable energy investments have nearly tripled since the adoption of the Paris Agreement in 2015, most of the money has gone to developed countries,” said the report.
The report emphasized that forming partnerships between international investors, the public sector, and multilateral financial institutions can play a crucial role in reducing the cost of capital, which is a significant barrier to energy investments in developing countries.
“Bringing in international investors, for example, lowers the spread on debt finance by 8 percent. Adding multilateral development banks (MDBs) lowers it by 10 percent. And combining the two with governments in public-private partnerships reduces it by 40 percent,” the report explained.
According to the study statistics, Egypt placed seventh among the top nations receiving FDI inflows in renewable energy, accounting for 14 percent of overall inflows in the sector for the year.
According to the analysis, worldwide FDI would fall by 12% in 2022 to $1.3 trillion, following a significant recovery in 2021. The Russian-Ukrainian conflict and its effects, as well as increasing food and energy costs and mounting governmental debt, all contributed to the downturn.
“The decline was felt mostly in developed economies, where FDI fell by 37 percent to $378 billion. But flows to developing countries grew by 4 percent – albeit unevenly, with a few large emerging countries attracting most of the investment while flows to the least developed countries declined,” according to the report estimates.
