COVID-19’s Impact on FDI- What Could be done in Ghana’s Oil Sector
by Franklin Cudjoe, Founding President & CEO.
Admittedly, the economic impact of COVID-19 is incalculable until the one-ten thousandth of a millimetre in diameter virus, as the Economist describes it, is completely eradicated from the surface of the earth. However, educated guesses and some critical analysis of the overall impact on FDI can be made.
A new UNCTAD analysis of how the coronavirus pandemic will affect global foreign direct investment (FDI) “now suggest that the downward pressure on FDI flows could range from 30% to -40% during 2020-2021, much more than previous projections of -5% to -15%.
Hence the endorsement by Mukhisa Kituyi, UNCTAD’s Secretary-General, of a call by the maritime industry to all governments to keep maritime trade moving by allowing commercial ships continued access to ports worldwide and by facilitating the rapid changeover of ships’ crews
The oil industry is one that is already facing significant headwinds with oil price hovering around USD 25/bbl. West-Africa is set to be one of the regions to be hit the hardest due to the fact that most of its oil developments are in deep waters, which by themselves drive costs.
Norway’s leading energy analysis bureau, Rystad Energy, expects that the number of sanctioned oil projects globally offshore will fall by 60-70% in 2020 versus 2019. See table below. This corresponds with its recent analysis that “Global oil demand is forecast to decline by 4.9% in 2020, compared to the previous year, Norway-based energy research center Rystad Energy said in a statement on Wednesday”.