Foreign direct investment (FDI) flows to Africa fell sharply by 42% year-on-year, reaching just $28 billion in the first half of 2025, according to the latest Global Investment Trends Monitor released on October 31 by UN Trade and Development.
This is the steepest regional decline globally, underscoring the continent’s vulnerability to macroeconomic shocks and investor caution.
“Investor caution is deepening. Tariff escalation and ongoing geopolitical tensions have heightened uncertainty, leading to a widespread wait-and-see attitude across many sectors,” the report noted.
Regional Breakdown: North Africa vs Sub-Saharan Africa
| Region | FDI Inflows (H1 2024) | FDI Inflows (H1 2025) | Change (%) |
|---|---|---|---|
| Africa (Total) | $48B | $28B | -42% |
| North Africa | $27B | $11B | -59% |
| Sub-Saharan Africa | $22B | $17B | -23% |
- The sharp drop in North Africa was largely due to the absence of megaprojects like Egypt’s Ras El-Hekma urban development, which had boosted 2024 figures. That $35 billion initiative was backed by Abu Dhabi Developmental Holding Company, the UAE’s sovereign wealth fund.
- Sub-Saharan Africa saw a more moderate decline, reflecting broader investor hesitancy and fewer large-scale deals.
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Africa vs Other Developing Regions
Africa’s FDI performance diverged from other developing regions:
- Latin America and the Caribbean: +12%
- Developing Asia: +7%
- Global FDI: -3% to $737 billion
The global decline was driven mainly by developed economies, where cross-border mergers and acquisitions (M&As) fell 18% to $173 billion.
Sectoral Impact: SDG-Linked Investment Under Pressure
FDI in sectors tied to the Sustainable Development Goals (SDGs) continued to decline:
| Sector | Change in Project Number | Change in Value |
|---|---|---|
| SDG-related sectors (overall) | -10% | -7% |
| Infrastructure (greenfield) | -25% | -31% |
| Water & Sanitation | — | -40% (no new projects in Africa or LDCs) |
| Agribusiness | -1% | +6% |
| Healthcare | -8% | +37% |
- Greenfield manufacturing projects dropped 29%, especially in supply chain-intensive sectors like textiles, electronics, and automotive.
- International project finance, crucial for infrastructure, fell 11% in number and 8% in value.
- Water and sanitation investment collapsed, with no new projects in Africa or least developed countries (LDCs).
Modest Recovery Possible by Year-End
UN Trade and Development warns that the global investment climate will remain challenging through 2025 due to:
- Geopolitical tensions
- Regional conflicts
- Economic fragmentation
- Supply chain de-risking
However, it notes that easing financial conditions, rising M&A activity in Q3, and higher sovereign wealth fund spending could support a modest rebound.
“The international investment environment is expected to remain challenging… but looser financial conditions and rising mergers and acquisitions could support a modest recovery by year-end,” the report concludes.
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