• FDI to Africa fell 42% to $28 billion in the first half of 2025
• North Africa saw the steepest decline after a 2024 megaproject boost
• Global FDI dropped 3% amid high rates and geopolitical uncertainty

Foreign direct investment (FDI) flows to Africa fell 42% year-on-year to $28 billion in the first half of 2025, according to a report released on October 31 by UN Trade and Development (formerly UN Conference on Trade and Development, UNCTAD).

Titled “Global Investment Trends Monitor,” the report shows that the decline was most pronounced in North Africa, where FDI inflows reached $11 billion between January and June 2025, compared with $27 billion during the same period last year. The sharp increase in early 2024 was largely due to the Ras El-Hekma urban development megaproject in Egypt, backed by Abu Dhabi Developmental Holding Company, the sovereign wealth fund of Abu Dhabi.

In Sub-Saharan Africa, FDI fell 23% year-on-year to $17 billion during the same period.

Overall, Africa’s performance contrasted with that of other developing regions, where FDI inflows remained broadly stable. Latin America and the Caribbean recorded a 12% increase, while developing Asia grew by 7%.

Globally, FDI declined by 3% in the first half of 2025 to $737 billion amid persistent headwinds, including trade tensions, high interest rates, and geopolitical uncertainty, which made investors more cautious. The drop was driven mainly by developed economies, where cross-border mergers and acquisitions—usually a key FDI driver—fell 18% to $173 billion.

Decline in Investment in SDG-Related Sectors

The report also notes that high borrowing costs and economic uncertainty continued to weigh on industrial and infrastructure FDI worldwide in early 2025. Greenfield project announcements fell 17% in number, including a 29% drop in manufacturing sectors tied to global supply chains such as textiles, electronics, and automobiles.

International project finance, crucial for infrastructure development, also decreased, with an 11% drop in the number of transactions and an 8% decline in value.

FDI in sectors critical to the Sustainable Development Goals (SDGs) dropped 10% in number and 7% in value in the first half of 2025, after a steep fall the previous year. Greenfield investments in infrastructure fell 31% in value and 25% in number, led by sharp contractions in Latin America and the Caribbean (-78% in value and -43% in number). Investments in water and sanitation declined by 40% globally, with no new projects launched in Africa or in least developed countries.

Only agribusiness and healthcare saw positive trends in developing economies, with stable investments in agribusiness and a 37% increase in healthcare.

Looking ahead, UN Trade and Development expects the global investment climate to remain challenging through the end of 2025. It warns that geopolitical tensions, regional conflicts, economic fragmentation, and supply chain risk reduction efforts will continue to weigh on global FDI. However, it adds that looser financial conditions, rising mergers and acquisitions in the third quarter, and higher spending by sovereign wealth funds abroad could support a modest recovery by year-end.