• Full AfCFTA rollout could raise Africa’s FDI by 120 % from global sources

• Reforms, stable rules, and regional cooperation seen as key to unlocking this potential

• Africa still lags in FDI, with flows concentrated in a few large economies

Africa’s full implementation of the African Continental Free Trade Area (AfCFTA) could raise foreign direct investment (FDI) on the continent by 120 %, according to the World Bank’s June 16 report on global FDI trends.

The institution estimates that AfCFTA could also boost intra-African investment by 85 %. The trade deal is expected to create a single market of 1.4 billion consumers with a combined GDP of over $3 trillion, making it a key driver for Africa’s growth and competitiveness.

But realizing this potential depends on applying investment, competition, and industrial policy protocols, improving transport and energy infrastructure, and maintaining macroeconomic and political stability across the region.

Uneven FDI and Major Challenges

The “Foreign Direct Investment in Retreat: Policies to Turn the Tides,” report highlights that FDI to developing countries fell to $435 billion in 2023, the lowest since 2005. Africa, already on the margins of these flows, could fall further behind without major reforms.

The decline is global. Developed economies attracted only $336 billion in FDI, the weakest level since 1996. Between 2012 and 2023, ten countries, including China, Brazil, and India, absorbed two-thirds of all FDI to developing regions.

Africa remains sidelined. Most investment goes to large economies like Nigeria, South Africa, and Egypt, while the 26 least developed African countries captured only 2 % of FDI. This weakens industrialization, job creation, and regional economic integration.

Slow Progress and the Need for Action

Since AfCFTA’s launch in January 2021, expectations have been high, but many member states have yet to meet their commitments. Some progress has been made. In April 2025, Côte d’Ivoire lowered tariffs in line with ECOWAS’s common external tariff, aligned with the World Customs Organization’s system.

The World Bank says the pace must accelerate. Barriers such as fragmented legal and tax systems still hold back capital flows. The report outlines three priorities to maximize AfCFTA’s impact: attract more FDI through stable, predictable regulations; channel investment to strategic sectors like agribusiness, technology, and renewable energy; and strengthen regional and global cooperation to create synergies.

Cautious Optimism for Africa

Despite a weak 2023, UN Trade and Development’s “World Investment Report 2025” shows a rebound in Africa’s FDI last year. Inflows jumped 75 % to $97.03 billion, largely driven by Egypt’s Ras El-Hekma megaproject. Even excluding that project, FDI rose 12 % to about $62 billion, or 4 % of global flows.

A Need for a Stronger Financial System

Dr. Patrick Ndzana Olomo, head of economic policy at the African Union Commission, says Africa’s single market needs a sovereign financial vision, structured and based on the continent’s real needs. He calls for the next phase: completing Africa’s financial architecture with a central bank, monetary fund, investment bank, and a continent-wide stock exchange.

As global trade faces major uncertainty, worsened by US-China tensions, AfCFTA remains a strategic tool to help Africa claim its place in the global investment landscape.