• FDI to Africa dropped to $59 billion in 2025, with North Africa down 67%

• Sub-Saharan Africa proved more resilient, posting a limited 6% decline

• Global FDI rose mainly due to financial hubs, masking weak underlying recovery

Foreign direct investment (FDI) flows to Africa fell sharply in 2025, declining by 38% to $59 billion, according to a report published on January 20, by UN Trade and Development, formerly known as UNCTAD. Titled Global Investment Trends Monitor, the report notes that the decline was far steeper in North Africa, which attracted just $17 billion during the year, down from $51 billion in 2024, a drop of 67%.

The strong rise in FDI recorded in North Africa in 2024 was largely driven by the Ras El-Hekma tourism and urban development megaproject on Egypt’s Mediterranean coast. The project is led by Abu Dhabi Developmental Holding Company, the sovereign wealth fund of the emirate of Abu Dhabi. By contrast, sub-Saharan Africa attracted $42 billion in FDI in 2025, representing a more moderate decline of 6% compared with the previous year.

Overall, Africa’s FDI performance mirrored broader trends across developing economies. Inflows to these countries fell by 2% to $877 billion, accounting for 55% of total global FDI. Low-income economies were the hardest hit, with three-quarters of least developed countries recording stagnant or declining investment flows.

FDI to developed economies rose sharply, increasing by 43% to $728 billion. This surge was driven by strong performance in Europe and financial hubs. The European Union recorded a 56% increase, supported by large cross-border mergers and acquisitions and a rebound in major economies such as Germany, France, and Italy.

At the global level, FDI increased by 14% in 2025 to about $1.6 trillion. More than $140 billion of this increase came from higher flows routed through global financial centers. Excluding these transit flows, global FDI rose by only about 5%, pointing to continued weakness in underlying investment activity.

The report also highlights a 10% decline in international investment in infrastructure in 2025. This was mainly due to a sharp slowdown in renewable energy projects, as investors reassessed revenue risks and regulatory uncertainty. Domestic investors increasingly stepped in to fill part of the gap, but UN Trade and Development warns that this shift deepens investment shortfalls in countries that rely heavily on international financing for large-scale infrastructure projects.

For 2026, the institution expects only a modest increase in global FDI flows, reflecting the continued impact of geopolitical tensions and economic fragmentation.

Walid Kéfi