FDI Trends in Africa (2025)

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Overall, Africa’s share of global FDI remains small, however, investment opportunities across the continent are increasingly viewed as a growth frontier, presenting competitive long-term benefits. Notably, Africa continues to offer higher average profitability on FDI relative to other regions, despite ample structural deficiencies fueling a high-risk premium; this is supported by the fact that the largest 40 companies in Africa have annualized returns of 12.9% in the last year.

GlobalData’s FDI Team expects FDI to diversifyaway from traditional, extractive industries focused on primary commodities and shift towards renewable energy, tech, and manufacturing. This shift will be amplified as African leaders are increasingly recognizing that FDI will underpin the development of their nations, enabling them to meet social, environmental, and economic goals. This has meant leaders across the continent are focused on improving the investment climate. Through implementing pro-business reforms and policy initiatives, African nations will lay the foundation for a more stable business environment. For instance, withapproximately $170 billion required annually to close the investment gap in infrastructure, governments are increasingly investing in improving the quality of infrastructure to reduce supply-chain and logistical bottlenecks, alongside reducing barriers to entry for foreign investors. This will prove crucial in increasing capital inflows across the continent in the long term.
Most pertinently, policy changes will better protect investors, minimize high levels of risk, and enable the increased level of project announcements to be equally matched in terms of project delivery and completion. High levels of project announcements across Africa currently indicate investors recognize the potential high earnings, reinforcing how fundamental market reforms will be towards positively impactingbusiness operations. To further protect investors and attract inward FDI, increased engagement with Public-Private Partnerships (PPPs) is expected to facilitate incoming projects, such as the plethora of renewable energy initiatives.

A syndicate of bilateral and blanket US tariffs, US-China trade warfare, and perpetuated geopolitical conflict across Ukraine, Russia, Lebanon, Yemen, Iran, Gaza, and the Sahel has instigated dramatic revisions in foreign direct investment (FDI) globally. Each explanatory factor has cultivated an international political-economic environment rife with proliferating trade embargos, maritime trade distributions, martial exposure, and widespread uncertainty. The European Union (EU) currently imposes 5,365 live trade sanctions across 83 nations and the United Nations (UN) monitors 14 sanctioned regimes. Moreover, the CBOE Volatility Index-a metric indicative of global investor anxiety-spiked to 40 in early April and then settled at 22.8 by the close of Q1 2025, registering a 22.8% QoQ increase. Hence-why, the total FDI projects announced fell by 16% (YoY) and 24% (QoQ) in Q1 2025.

It is evident that the previously adopted consensus that international economic cooperation ensures political stability is eroding, heightening investment caution for governments looking to diversify sovereign wealth funds and multinational corporations (MNCs). However, the US’s selective withdrawal from the international trade market is inadvertently fostering new international trade relations-and, subsequently, facilitating new FDI opportunities-to substitute US demand, diversify market presence, and encourage reciprocal investment.

In January 2025, 48 nations ratified Africa’s Continental Free Trade Area (AfCGTA), striding closer to a single market for goods/services across 54 African countries.

In January 2025, the UAE and Kenya signed a Comprehensive Economic Partnership Agreement (CEPA) to “foster innovation in key sectors like agriculture, retail, healthcare, financial services, technology, and tourism”.

In May 2025, Uganda secured $800 million in financing from the Islamic Development Bank to bolster railway infrastructure.

For Africa, access to international credit markets and defining equal-footed investments continues to be the leading factors combative to economic development prospects – FDI posits to fill this void, whereby capital expenditure invested in opened African projects increased by 24% in 2024 (YoY), albeit is expected to decline by 34% in 2025 (at present rate). Overall, spanning announced and opened projects, GlobalData’s FDI team recorded 18,463 projects globally and 830 projects regionally (in Africa) across 2024

Scope

The reports provides an overview of FDI trends in Africa. The report will also help in navigating the changing effects of FDI in Africa.

Reasons to Buy

The report will help you to understand the trends of FDI in Africa.

The report will additionally aid in comprehending the evolving impacts of foreign direct investment in Africa.

Understand the sentiments of investors behind investing in Africa.

Identify the top sectors and top inward FDI hotspots.

Table of Contents

Executive Summary

The Global FDI Narrative

Top Global FDI Hotspots in Q1 2025: Developed vs Developing Markets

The African FDI Narrative

Inward FDI Hotspots in Africa

Sectoral Disparities: Unpacking the Realities of Africa’s FDI Activity

Top Investors

Concluding remarks

Appendices

Methodology

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