The collapse in foreign direct investment to African economies during the pandemic has bolstered the need for intra-African trade, the continent’s top trade official has said, warning that it will take years for investment to return.
“Capital is a coward, so it will take some time before foreign direct investment starts flowing back in full force to the continent,” said Albert Muchanga, the African Union’s commissioner for trade and industry.
The total value of greenfield investments in Africa in the first three months of 2020 fell 58 per cent, year-on-year, according to the UN Conference on Trade and Development. Africa’s natural resource-dependent economies had been particularly exposed, Mr Muchanga said, as the prices of exports, including oil and copper, slumped and investors pulled funds from frontier markets in search of safer investments.
But rather than wait for that foreign capital to return, African economies should drive growth by focusing on domestic production and intra-African trade, he said.
Mr Muchanga is leading the effort to finalise the Africa Continental Free Trade Area (AfCFTA) agreement, which will create a single tariff-free $3tn market, ahead of its implementation on January 1. He said AfCFTA will be essential to enabling Africa to bounce…