Egypt Leads Middle East and Africa in Attracting FDI

Foreign direct investment (FDI) into the Middle East and Africa (MEA) region has increased in 2022, with the number of announced FDI projects shooting up by 54% to 2,131 since 2021. Capital investment into the region also rose by 234% over the period, reaching $261.2 billion.

The UAE remained the top destination for the FDI in the region and has attracted 879 projects, marking a 71% increase from 2021. The UAE also accounted for 41% of FDI projects across the MEA and 15% of jobs created in the region, according to a report entitled “The fDi Report 2023,” released by fDi Markets, the greenfield investment monitor of the Financial Times.

The UAE-based URB, a developer of sustainable cities, has announced to invest $20 billion to develop a new self-sufficient and net zero smart city on 1,700 hectares in the Eastern region in South Africa. The residential hub will have 40,000 units spread over 12 residential districts and will accommodate 150,000 residents.

The number of FDI projects into Egypt rose by more than 150% to 148 in 2022, representing an estimated capital investment of $107 billion. Egypt secured 19 investments, each valued around $1 billion, from companies establishing green hydrogen developments, mostly in its Suez Canal Economic Zone.

“This represented a 41% market share in the MEA region and Egypt is ranked as the top destination country for capital-intensive FDI in the region, and second globally in 2022. This growth is fuelled by several mega projects being announced in renewable hydrogen,” the report said.

Two of the major hydrogen projects include one each from India and the UK.

The India-based Acme Group is to construct a $13 billion green hydrogen plant in Ain Sokhna, Egypt, part of the Suez Canal Special Economic Zone. The plant, to be built over 4.5 million sq m, will produce 2.2 billion tonnes of green hydrogen annually.

The UK-based Globeleq is planning to build a 3.6 GW hydrogen production hub at a cost of $11 billion within the Suez Canal economic Zone in Egypt. The hub is to be powered by 9 GW of wind and solar capacity within the zone. The green fuel production plant will be located on an area of 10 million sq m and have a production capacity of 2 million tonnes per year.

The report also said that the number of FDI projects destined for the Middle East increased from 870 in 2021 to 1397 in 2022. This represented a growth of 61% on 2021 and a market share of 8.7% of FDI projects globally.

The number of announced FDI projects into Africa rose from 517 projects in 2021 to 734 in 2022. While project numbers have decreased by 30% since 2019, capital investment into Africa was more than 2.5-times higher in 2022 than it was in 2019.

Global Investments

Globally, international investors announced more than 16,000 FDI projects in 2022 valued around $1.155 trillion and more than 2.2 million jobs were created. The pace of FDI in 2022 shows signs of ongoing recovery following the shock effect of the COVID-19 pandemic, with the number of projects increasing 16% and the pledged capital investment rising by 64% from 2021.

Last year was one characterised by FDI mega projects, with a record number of projects worth at least $1 billion of capital investments. A total of 159 such projects (including estimates) were announced in 2022 — the highest level in the past decade.

The US was the top destination country for the number of FDI mega projects as the country attracted a high number of large-scale investment projects in semiconductors and batteries. In addition to this, the US was the top source of outbound FDI in 2022, with $207.2 billion recorded across 3,647 projects.

Western Europe attracted the highest number of FDI projects in 2022, at 5,250. In terms of capital investment, both western Europe and Asia-Pacific attracted around $279 billion, with the latter taking first place by just $229.9 million, the report added.

Key Trends

For a fourth year running, the renewable energy sector has attracted the highest total capital investment globally.

Renewable energy sector has attracted the highest total capital investment globally, with a value of $343.6 billion across 527 projects — cementing its position above coal, oil and gas which was last top in 2018.

Inbound FDI for China declined further in 2022. Compared to 2019, the number of projects into China last year were down 60% and capital investment was down 68%.

Following Russia’s invasion of Ukraine in early 2022, the number of announced FDI projects into Russia also plummeted to only 13, the report said.