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7 September, 2022

FDI in the Middle East and Africa in 2021: The state of play

FDI levels in the Middle East and Africa returned to growth in 2021, with the number of projects coming into the region rising by 97%.

By Cara Lyttle

The Global FDI Annual Report 2022 shows the number of greenfield foreign direct investment (FDI) projects into the Middle East and Africa (MEA) grew by 97% in 2021, totalling 1,419. This increase also surpassed the level experienced in 2019, before the Covid-19 pandemic hit.

UAE leads for FDI in Middle East and Africa

The United Arab Emirates (UAE) was the top country for inbound FDI in the Middle East and Africa in 2021, and the only country from either region to place in the global top ten list in terms of project numbers. FDI into the UAE showed a 77% increase when compared with data from 2020, and a 51% rise when compared with 2019 figures.

Dubai was the leading city destination globally when it came to attracting FDI projects in 2021, taking 74% of all FDI into the UAE and 31% of the projects coming into the whole MEA region (despite accounting for only 34% of the UAE’s population). Abu Dhabi attracted the second-highest number of FDI projects in the UAE with a 16% market share, while Sharjah ranked third with 3%.

FDI into Dubai increased by 87% compared with 2021, recording 441 projects. The majority of FDI into the city was in the software and IT services sector (117 projects), an increase of 117% from 2020. Business and professional services ranked second with 74 projects while tourism placed third with 37.

Of the top ten sectors, communications and media showed the largest percentage increase in Dubai in 2021, with project numbers increasing from eight in 2020 to 26. Industrial machinery investments into Dubai also witnessed a significant rise, from five projects in 2020 to 13 in 2021, while construction and real estate investments jumped from seven to 16. On a business function level, sales and business services activities accounted for a combined market share of 53% of FDI into Dubai in 2021, followed by construction with a 9% share.

The bulk of FDI projects coming into Dubai in 2021 came from the US, with companies from the country investing in 89 projects, followed by the UK with 72 and India with 61. These top three countries had a combined market share of 50% of the FDI coming into Dubai in 2021, with investment from India rising rapidly, increasing sixfold on 2020 figures. Mumbai-based Tata and Sons was the leading Indian investing company in Dubai, recording two hotel projects and one manufacturing plant for consumer products in 2021.

Investment into Abu Dhabi also showed strong growth, up by 36% in 2021 when compared with 2020 figures. As with Dubai, Abu Dhabi’s top sectors were also software and IT services and business and professional services. In contrast, the tourism sector, which ranked third for Dubai, was replaced by communications and media and financial services, which placed joint third in Abu Dhabi.

Saudi Arabia witnesses a 186% rise in FDI projects in 2021

Our FDI Projects Database shows the number of greenfield FDI projects coming into Saudi Arabia grew by 186% in 2021, totalling 235. This rise in inward investment also represents an increase on the 106 projects recorded in 2019, before the Covid-19 pandemic hit.

Tourism and business and professional services were the leading sectors into Saudi Arabia, with 46 and 45 projects, respectively. Software and IT services ranked third with 29 projects while construction and real estate placed fourth with 17. Construction and headquarter investments were the leading business operations, each winning 51 projects, representing a combined market share of 43%. Sales operations, which accounted for 41% of Dubai’s inward investment, only represented 15% in Saudi Arabia.

The US, the UAE and the UK were the top source markets for FDI in Saudi Arabia in 2021, investing in a total of 112 projects. China and India ranked fourth and fifth, investing in 20 and 15 projects, respectively. At a city level, the country’s capital, Riyadh, attracted the bulk of the FDI with a 63% market share, followed by Jeddah with 12% and Dammam with 6%.

EV Metals Group, an Australia-based chemicals producer, was the top investor in Saudi Arabia in terms of capital investment. The company announced plans to invest $3bn (A$4.47bn) to build manufacturing facilities, which will initially be dedicated to the production of lithium and nickel. In terms of job creation, Gulf Development International, a UK-based real estate company, was the top investor, announcing plans to create 2,200 new jobs for a volumetric modular assembly plant due to open in Tabuk province in late 2022.

Egypt topples Morocco to become Africa's FDI leader

Egypt, which ranked second for African FDI projects in 2019 and 2020, managed to topple Morocco in 2021 and become the leading African FDI destination with 116 projects. Although FDI into Morocco witnessed a significant increase of 27% from 2020 to 2021, FDI into Egypt jumped by 90% in this time, meaning it overtook Morocco.

The UAE was the main source market for Egypt’s FDI, accounting for one-fifth of its total project numbers, with Capriole Construction, an Abu Dhabi-based real estate company, investing in five projects. The US and UK followed with a combined market share of 28%, with the majority of these investments aligned to the tourism and pharmaceutical sectors. At a city level, Cairo was by far the leading destination, winning 66% of all Egypt’s FDI, while Alexandria and 6th October City placed joint second with a market share of 8% each.

Japan-based cosmetics company Saraya was the leading investor in terms of job creation, announcing plans to create 1,500 new jobs at a $10m (Y1.44bn) plant in the Suez Canal Economic Zone. In terms of capital investment, BP, the UK-based oil and gas company, was the leading investing company in Egypt, and in the MEA region as a whole. The company invested $9bn (£7.84bn) to establish a new production plant at Raven Field, Alexandria, which includes five gas fields across the North Alexandria and West Mediterranean Deepwater offshore concession blocks in the Mediterranean Sea.

Top investing companies in the Middle East and Africa

Regionally, the leading investor companies in the MEA region were Switzerland-based workspace provider IWG and China-based tourism and hospitality company Jin Jiang International. Each invested in 20 projects, primarily focused in Saudi Arabia, the UAE and Morocco. Qatari telecommunications company Ooredoo ranked third (19 projects), InterContinental Hotels Group placed fourth (18 projects) and US-based logistics giant Amazon placed fifth (15 projects).

(State and city-level analysis is used when such information is provided. Country-level only data has been excluded from such analysis). 

Download the full Global FDI Annual Report 2022 here.

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