Despite the lowest global FDI flows in the last 10 years (USD1.3tn in 2018), Africa benefitted from an increase to USD46bn (+11%) in 2018; yet debt remained the main financing scheme. According to Unctad, the main destinations of FDI flows were Egypt (USD6.8bn), South Africa (USD5.3bn), Congo Rep. (USD4.3bn), Morocco (USD3.6bn) and Ethiopia (USD3.3bn). However, FDI is not always equity; and intracompany loans were dominant in Congo Rep. and South Africa. Moreover, USD4.6bn of FDI outflows from South Africa also means that net FDI covers only a negligible 8% of the current account deficit (still heavily financed through portfolio flows). In other regions, FDI flows remained quite weak, particularly to West Africa (USD9.6bn, lowest level since 2006) and Central Africa (USD4.5bn, excl. Congo Rep.). Overall, according to our estimate net equity FDI inflows financed only about one third of the combined -USD80bn current account deficit observed in Africa in 2018; so debt accounted for two thirds. As we expect the current account gap to widen to -USD110bn in 2019, debt will likely remain the main financing scheme.
