When the COVID-19 pandemic swept across the globe in 2020, its impact on foreign direct investment (FDI) in Africa was swift and severe.
The continent witnessed a dramatic collapse in investment flows, with greenfield FDI plummeting by nearly 60% compared to the preceding decade. By year-end, inflows had dropped to just USD 39 billion, barely surpassing levels last seen in 2006.
This contraction was especially painful for economies heavily reliant on foreign capital to drive infrastructure, industrialisation, and job creation. Yet, in an unexpected turn of events, Africa staged a strong recovery in 2021, as delayed projects resumed and global confidence began to return. That year, FDI inflows surged to USD 83 billion — a record high for the continent.
A Recovery Amid Global Uncertainty
As the world economy entered a new phase of uncertainty in 2022 and 2023, Africa’s investment flows demonstrated relative resilience. While global FDI showed signs of contraction due to inflationary pressures, energy price volatility, and geopolitical tensions, Africa’s FDI remained stable. Despite a modest dip to USD 53 billion in 2023, the overall investment climate held firm — signalling that investor confidence had not only returned but was diversifying.
A key feature of this rebound was the transformation of sectoral preferences. Historically, African FDI had been dominated by extractive industries — oil, gas, and mining. Post-pandemic, however, there has been a notable shift. Investors are increasingly targeting high-growth sectors such as renewable energy, urban development, digital infrastructure, and business services.
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2024: A Record Year, With Caveats
The year 2024 marked a turning point. According to UNCTAD’s World Investment Report, Africa experienced a 75% increase in FDI inflows, reaching an unprecedented USD 97 billion. While this figure was inflated by a single mega-deal in Egypt’s urban development sector, even when excluding that outlier, investment flows rose by a solid 12% — highlighting the continent’s improving fundamentals.
Reforms have played a critical role in this renewed momentum. In 2024 alone, 36% of all investment policy changes across Africa were classified as “facilitative,” reflecting liberalisation efforts, the reduction of bureaucratic barriers, and the harmonisation of investment frameworks under the African Continental Free Trade Area (AfCFTA).
Emerging Investment Hubs and Sector Leaders
North Africa led the pack in 2024, with Egypt attracting the lion’s share of capital thanks to its large-scale urban and infrastructure initiatives. South Africa, Nigeria, and Kenya also remained among the top destinations, with increasing interest in their renewable energy ecosystems and tech sectors.
Sectorally, Africa is fast becoming a magnet for green energy projects and digital economy investments. From solar farms in the Sahel to data centres in Nairobi, investors are now targeting long-term value creation over short-term resource extraction.
The 2025 Outlook: Risks on the Horizon
Despite recent gains, the early data for 2025 points to emerging headwinds. The first quarter saw a notable decline in project announcements, signalling that external shocks — including oil market instability, US trade policy uncertainty, and the slow progress of GCC diversification projects — may weigh on investor sentiment.
Nonetheless, countries that continue to implement pro-investment reforms, streamline regulations, and invest in human capital are well-positioned to weather the storm. The growing involvement of non-traditional investors — including the United Arab Emirates, South Korea, and intra-African capital — offers hope for a more balanced and diversified FDI landscape.
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From Collapse to Transformation
The story of post-pandemic FDI in Africa is one of both fragility and transformation. The collapse of 2020 revealed deep vulnerabilities, but the years that followed also showcased Africa’s adaptability and untapped potential. As we enter a new investment cycle in 2025, cautious optimism prevails.
Africa’s future as a destination for sustainable, impact-driven investment will depend not just on global capital flows, but on the continent’s ability to continue delivering reforms, stability, and opportunity. The continent may still face challenges — but it is no longer a passive recipient of capital. Africa is increasingly shaping the investment narrative on its own terms.
