Rabat – Much like other developing nations, Morocco is grappling to maintain a positive flow of Foreign Direct Investments (FDIs), as recession fears loom over the global economy.
At the end of 2023, the net flow of FDIs in Morocco took a nosedive, dropping by 53.3%, and settling at MAD 10.1 billion ($1 billion). The figure is a far outcry from the MAD 21.7 billion ($2 billion) recorded a year earlier, according to a recent report from the Office d’Echange (OE).
The report details that FDI revenues, or returns on foreign investments, equally fell, reaching MAD 32.5 billion ($3.2 billion) at the end of 2023, down from MAD 39.5 billion ($3.9 billion) a year earlier.
Meanwhile, FDI expenditures, which include funds spent on acquiring ownership stakes in foreign businesses among others, recorded a 25% annual growth rate, climbing to MAD 22.3 billion ($2.2 billion), up from MAD 17.7 billion ($1.7 billion).
The suboptimal growth in FDIs in Morocco is not an isolated incident, as investment policy and capital market trends drove investments away from developing economies.
The 2023 UNCTAD World Investment Report indicated that developing economies are facing an increasing annual investment deficit.
Earlier this month, another report from UNCTAD maintained that the flow of foreign investments into developing countries dropped by 9% in 2023, amounting to $841 billion.
Even China, the world’s second-largest economy, failed to escape the trend, as it recorded an “unusual” 6% drop in FDIs, the report explains.
In Africa, FDI flows were almost flat at an estimated $48 billion (-1%). Meanwhile, Greenfield project announcements – a type of project that involves establishing a facility without constraints imposed by prior work – increased triggered by strong growth in Morocco, Kenya, and Nigeria.
However, financing deals for projects dropped one-third, more than the global average decline, putting in peril prospects for infrastructure finance flows.
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