The Commonwealth of Independent States: 2022 Foreign Direct Investment

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Interest in the CIS is growing with Russia leading but China and Iran making headway

In the Commonwealth of Independent States (CIS), mutual Foreign Direct Investment reached US$44.6 billion by mid-2022, according to research from the Eurasian Development Bank (EDB). Russian investors accounted for about 80% of this volume, while Kazakhstan attracted the largest capital amount of investments at US$10.8 billion, or 24.3% of the total.

The EDB is an international development finance institution investing in the development of the economies, trade and other economic ties, and integration in Eurasian countries. The EDB was founded in 2006 and is headquartered in Almaty, Kazakhstan.

The CIS in its current format includes Armenia, Azerbaijan, Belarus, Kazakhstan, Kyrgyzstan, Russia, Tajikistan, and Uzbekistan, while for the purposes of the EDB report, Georgia was also included.

Investors of CIS countries have shown particular interest in green field projects, while the share of private capital investments is predominant at 56%.

The Eurasian Development Bank has been spearheading a flagship analytical project dedicated to monitoring mutual foreign direct investment (MFI) in the CIS countries and Georgia. The investment database is formed on a bottom-up basis based on comprehensive information from open sources, including company reports and other primary information. The data collection methodology makes it possible to take into account investments through offshore companies, which distinguishes the EDB MIM from the statistics of national departments and international organisations.

A new element of 2022 statistics has been the inclusion of mutual investment of the CIS countries with China, Iran and the Gulf states, giving a better regional overview for the development of investment relations and trade and economic cooperation between Central Asia, East Asia and the Middle East.

Dynamics of accumulated mutual FDI of the CIS countries and the EAEU

EDB analysts stated that the first period of growth in mutual FDI in the CIS fell on 2008–2012, when the accumulated volume of these investments increased from US$35.8 billion to US$54.8 billion. The second significant period of growth in mutual FDI was in 2016–2020, from US$36.4 billion to US$44.9 billion.

But by the end of 2021, the level of accumulated investments had decreased slightly to US$44.3 billion dollar, but rose again to US$44.6 billion by mid last year. Overall, these figures are indicative of regional investment stability, if not significant growth.

Mutual FDI in the EAEU by mid-2022

Estimated at US$24.5 billion, the EDB data for the first half of 2022 are preliminary findings, although EDB analysts note a “compression” of the base of existing projects, mainly due to the withdrawal of Russian investors from several countries in the region.

Russia remains though the main cross-border investor in the CIS. The share of Russian FDI in mid-2022 accounted for 79.2% of CIS mutual investments, while Kazakhstan and Azerbaijan were in second and third place with 9.5% and 8.4% respectively.

Kazakhstan is the leader in the structure of attracted mutual FDI in the CIS. According to the results of the first half of 2022, the share of Kazakhstan in the import of mutual FDI amounted to 24.3%.

Azerbaijan is an active investor in the region. The volume of exported FDI in relation to GDP amounted to 6.7% of GDP (for comparison: the figure in Russia is 2% of GDP). This testifies to the increased investment potential of Azerbaijani companies and their expansion into the markets of other CIS countries.

These are followed by Uzbekistan (20.1%) and Belarus (12.6%). Changes in the structure compared to 2016 are significant. Ukraine, which effectively left the CIS in 2014, has seen mutual investment from the CIS countries decrease threefold from 12.0% to 4.0%, effectively cutting off its sources of regional foreign investment – until the Russian conflict began. By pre-invasion early 2021, Ukraine had declined to become the poorest country in Eastern Europe with a GDP growth and per capita income lower than Belarus yet with a population four times larger. These should be clear economic warning signals for the European Union as concerns the underlying Ukrainian foreign policy sans conflict.

Uzbekistan meanwhile demonstrated the greatest upward movement (from 11.7% to 20.1%) against the backdrop of improvements in the investment climate in the country.

In addition to Kazakhstan, which accounted for 53% of Russian FDI in the EAEU and 30% of Russian FDI in the CIS as of mid-2022, Russian investors are actively increasing capital investments in Uzbekistan and Azerbaijan. Since 2018, Russian investment into Uzbekistan increased by 2.1 times, and in Azerbaijan by 1.7 times.

Major CIS Investors

The five largest FDI destinations in the CIS are associated with Russian investment in Kazakhstan, Uzbekistan, Belarus, Azerbaijan, and Armenia. Kazakhstan’s FDI in Russia and Azerbaijani FDI in Georgia and Ukraine are also significant investment destinations.

The investment leader in the region is Lukoil, which has doubled its presence in the Azerbaijani Shah Deniz oil and gas project. The Russian companies Lukoil and Gazprom (together with Gazprom Neft) account for over 40% of the total stock of mutual FDI in the CIS.


The sectoral structure of mutual investments in the EAEU and the CIS are different. Oil and natural gas production accounts for 24% of FDI stock in the CIS. In the EAEU, this industry occupies only fourth place, while the first is the extraction of metal ores (19.5% in the structure of mutual FDI in the EAEU).

A significant share in mutual FDI of the EAEU countries belongs to the financial sector (12.4%). In the first half of 2022, Sberbank was the leader in terms of FDI stock in the banking sector, followed by VTB, Gazprombank and Alfa-Bank.

Looking To Asia

Mutual investments of the CIS countries with China, Iran and the most developed states of the Arab world have significant growth potential. The expansion of Chinese capital into the post-Soviet countries is now substantial. Iranian business is likely to increase its presence in the countries of Eurasia, especially in the Caspian region, while the Arab world is becoming more and more attractive for investors from the CIS countries.

Accumulated Chinese FDI in 12 post-Soviet countries exceeded US$67.5 billion by mid-2022, including US$12.5 billion in investment in Russia. Investors from China have become more active in Russia. Chinese FDI stock in Russia grew by 27.4% from 2016 to 2022, while in the EAEU as a whole it grew by 8.1%.

The total volume of Iranian FDI in the CIS reached US1.8 billion in 2022, with the key recipient being Azerbaijan. There are also Iranian investments in Armenia, Belarus, Kazakhstan, Russia, and outside the EAEU in Tajikistan. However, CIS investments into Iran are still small. The GCC countries act more as recipients of FDI from the CIS countries, mainly Russian investments, than as capital exporters to the countries of the region.

EDB Chief Economist Evgeny Vinokurov notes 3 key trends in mutual investment between the EAEU countries: “Firstly, the long-term trend is an increase in FDI in projects implemented from scratch, the so-called greenfield projects. Their volume increased by 1.6 times over the past 6 years and reached 32%. Secondly, the volume of FDI of investors with 100% private capital has increased by almost 1.3 times over the past 6 years. Such projects accounted for 56% in the structure of mutual investments of the EAEU countries by mid-2022. We believe that the share of private companies in mutual FDI may still grow against the backdrop of a reduction in cross-border investment activity of state-owned companies. Thirdly, cross-border green investments have great potential, but their volume in absolute terms is still small.”

Main source:

Summary by Chris Devonshire-Ellis

The EDB report is another example of how Russia in particular has planned ahead for potential problems in Europe by projecting investment into the CIS nations. The trade and investment into the CIS region appears to be a trend, and one that can be expected to grow. Yesterday’s report (link) concerning Russian investment into Central Asia and Kazakhstan also showed significant changes to Russian state and corporate trade and investment attitudes to the region, with the advantage of them showing H2 2022 results, while the EDB report contains just the H1 figures. Should the 2022 Kazakh trade figures prove correct, the implication is that the 2022 CIS figures would show an overall increase of about 6% in terms of FDI volumes.

As an aside, the short-sighted decision by Ukraine to cease membership of the CIS in 2014 effectively destroyed its economy – before the outbreak of the conflict with Russia. That should be food for thought for economists when dealing with a post-conflict reconstruction of its economy, and the political and economic decisions that were taken to put it into this position. The country had been geared to commercial engagement with the CIS, not EU and the upgrading required to lift it anywhere close to where it needs to be is going to require rather more than war damage repairs to correct. Having cut itself off from its eastern neighbours, themselves none too happy with Kiev, the Ukraine will be EU reliant and demanding, an issue that may not go down well in the Balkans, who were supposedly next in line for ascendency.

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