…records second-steepest decline among developing regions
Africa struggled to attract Foreign Direct Investment (FDI) in 2025 as inflows fell by 38 percent, even as global FDI rebounded by 14 percent, according to preliminary estimates by the United Nations Conference on Trade and Development (UNCTAD).
The report, released on Tuesday, shows that FDI into the continent declined to $56 billion from $96 billion in 2024, reversing gains recorded a year earlier. The 2025 figure, however, was broadly in line with 2023 levels, underscoring the volatility of investment flows into Africa.
UNCTAD attributed the sharp decline largely to major divestments, most notably in South Africa. Investment activity weakened across key sectors including green hydrogen, mining and infrastructure, although some countries showed resilience. Angola and Mozambique recorded stronger inflows, while Nigeria saw a modest turnaround toward the end of the year.
“FDI inflows dropped sharply by about one third, reflecting a return to prior levels after inflated FDI numbers in 2024 driven by a single large project,” the report said. Among African economies, inflows to Angola reached an estimated $3 billion, marking a return to positive territory after nine consecutive years of net divestments.
Egypt remained Africa’s largest FDI destination, attracting an estimated $11 billion in inflows. Mozambique recorded an 80 percent surge in FDI to about $6 billion, supported by the resumption and acceleration of construction on major Liquefied Natural Gas projects.
The continent also recorded the second-steepest decline in FDI among developing regions. The UN organisation noted that the most significant factor among middle-income African economies was a major divestment in South Africa, which posted negative inflows of $6 billion following Anglo American Plc’s $7.2 billion spin-off of its 66.7 percent stake in Valterra Platinum Limited.
Globally, FDI flows to developed economies jumped 43 percent to $728 billion in 2025, driven largely by Europe and major financial hubs. The European Union recorded a 56 percent increase, supported by large cross-border acquisitions and a rebound in key economies including Germany, France and Italy.
But FDI flows to developing economies slipped by 2 percent to $877 billion. Lower-income countries were hit hardest, with nearly three-quarters of least developed countries recording stagnant or declining inflows.
The report also highlighted a growing concentration of global investment in capital-intensive and technology-driven projects. Data centres alone accounted for more than one-fifth of global greenfield project values in 2025, with announced investments exceeding $270 billion, largely driven by demand for artificial intelligence infrastructure and digital networks.
France, the United States and the Republic of Korea led as host countries for these projects, while emerging markets such as Brazil, India, Thailand and Malaysia also attracted significant investments.
Looking ahead, UNCTAD said downside risks to global investment are mounting. While FDI flows could increase modestly in 2026 if financing conditions ease and cross-border mergers and acquisitions recover, real investment activity is likely to remain subdued.
“Geopolitical tensions, policy uncertainty and economic fragmentation continue to weigh on investor confidence,” the organisation said, warning that without coordinated action, global investment risks becoming increasingly concentrated in a few regions and sectors.