Chapter 01:
The impact of the pandemic on FDI inflows
When the world went into lockdown, almost every country in the world saw FDI inflows fall drastically. Global FDI collapsed in 2020, down 42% from $1.5 trillion in 2019 to an estimated $859 billion, according to an UNCTAD Investment Trends Monitor published in January.
New investment projects were paused or cancelled entirely, and IPAs couldn’t rely on tried and tested methods to connect with investors and discuss new opportunities. “We have always relied on business travel and trade shows, so all our activities were affected,” says Anisa Muhammed Ali, Assistant VP of Strategy and Execution at Dubai CommerCity. “Investors started consolidating rather than expanding projects, and we had to come up with new ways to make ourselves an attractive investment destination.”
We have always relied on business travel and trade shows, so all our activities were affected. Investors started consolidating rather than expanding projects, and we had to come up with new ways to make ourselves an attractive investment destination.
“All IPA’s were suffering in one way or another,” says Fahad Al Gergawi, CEO of Dubai FDI and President of WAIPA. People could not travel, decision making had come to a standstill, those were times of great difficulty,” he says. But it was not all bad news. “It gave us time to reflect, to see where we are, how we can enhance our readiness for the future. Now more than ever FDI will play a pivotal role in future job creation,” he adds.
The South African city of Durban was enjoying a boom in 2019 with major new investments including a new mobile phone manufacturing facility at Dube Trade Port, and coverage in newspapers like the New York Times. “British Airways had just opened a new route to Durban and named us one of the top places to see in the world. Then Covid hit us like a torpedo,” says Russell Curtis, CEO of Invest Durban. Almost overnight, a 3.5-billion-rand project for a new bottling factory was stopped. “It was a crushing season for everyone, but we had to carry on. We had to survive, just to retain what we’d already attracted,” Curtis says.
In some places, the impact was less, particularly in regions with high levels of investment in gaming, health tech and FinTech. In Turkey, a 42% collapse in direct investment was relieved when US gaming giant Zygon purchased local gaming start-up Peak Games for $1.8 billion. The country also saw investments from Nestlé, and auto giant Ford invested in a new plant to build electric cars. “We’ve seen a dip but in some areas it’s business as usual,” says Ahmet Ihsan Erdem, Vice President at the Investment Office of Turkey.
In some places, the impact was less, particularly in regions with high levels of investment in gaming, health tech and FinTech. In Turkey, a 42% collapse in direct investment was relieved when US gaming giant Zygon purchased local gaming start-up Peak Games for $1.8 billion. The country also saw investments from Nestlé, and auto giant Ford invested in a new plant to build electric cars. We’ve seen a dip but in some areas it’s business as usual.
Ahmet Ihsan Erdem | Vice President, Investment Office of Turkey