World Trade Organization Warns of sharp Decline in Foreign Investment to Developing Nations

BY: Chidozie Nwali

World Trade Organization (WTO) Director-General Ngozi Okonjo-Iweala has issued a stark warning regarding the global economic landscape, revealing that foreign direct investment (FDI) into developing economies is experiencing a significant and troubling downturn.

Speaking at the 2025 Africa Growth and Opportunity-Research in Action (AGORA) Conference, Dr. Okonjo-Iweala highlighted that this retreat in capital poses a severe risk to global resilience and the economic prospects of emerging markets.

The Director-General noted that In 2023, FDI inflows to developing economies fell to just 2.3 percent of GDP. A 50% drop from peak 4.6% recorded in 2008.

In 2024, Egypt attracted the highest foreign investment in Africa, over $46 billion. largely driven by a $35 billion Ras El-Hekma megaproject, a coastal city development partnership with the United Arab Emirate (UAE).

While in the first quarter of 2025, FDI to Nigeria fell by over 70% as investors shifted toward “hot money”—short-term, high-yield instruments like government bonds and treasury bills—rather than long-term infrastructure or manufacturing projects.

Dr. Okonjo-Iweala emphasized that FDI is not just capital; it is “a key driver of growth and job creation and a vital mechanism for the spread of new ideas and technology,” She said.

Despite the sobering FDI figures, she argued that the solution lies in “re-globalization”—bringing regions like Africa from the “margins to the mainstream” of global supply chains.

“Building the right partnerships now, making the right investments, and cultivating the important African stakeholders is the way to go,” she stated, citing the World Bank and Italy’s Mattei Plan as critical partners in this effort.

She called for a shift from commodity dependence to value-added production to attract “efficiency-seeking” investment in manufacturing and services.