Foreign Direct Investment Flows to Africa Plummet in First Half of 2025
According to a report published by the United Nations Conference on Trade and Development (UNCTAD) on October 31, foreign direct investment (FDI) flows to Africa have sharply declined in the first half of 2025, reaching $28 billion, a 42% decrease from the same period last year.
Regional Breakdown
The decline is particularly pronounced in North Africa, where FDI flows have retreated to $11 billion, compared to $27 billion in the same period in 2024. In Sub-Saharan Africa, the decline reaches 23%, with FDI falling to $17 billion in the first half of 2025.
Global Context
Globally, FDI flows have also decreased, albeit to a lesser extent. Worldwide FDI flows have receded by approximately 3% in the first half of 2025, to $737 billion. This decline can be attributed to several factors, including:
- High interest rates
- Evolving supply chains
- Rising geopolitical tensions
- A preference among companies for domestic operations or reinvestments rather than cross-border expansions
Implications for Africa
For the continent, this decline in FDI is particularly concerning:
- Reduced foreign capital inflows slow down infrastructure projects, industrial modernization, and green transition initiatives.
- The fact that the decline is more pronounced in North Africa also reflects the region's vulnerability to large, one-off projects that can distort annual figures.
- For Sub-Saharan countries, even though the decline is less severe, it remains significant and could hinder development and economic diversification ambitions.
Outlook and Factors to Watch
UNCTAD remains cautious about the coming months, forecasting a tense investment climate until the end of 2025, marked by:
- Rising geopolitical conflicts
- Supply chain fragmentation ("de-risking")
- Increased investor caution towards emerging markets
For Africa, two key levers appear essential to monitor in order to attract capital once again:
- Strengthening institutional conditions and macroeconomic stability
- Focusing on "real" value-creating projects (manufacturing, infrastructure, digital) to avoid dependence on a few large megaprojects that bias averages.
