Foreign direct investment (FDI) flows to Africa fell sharply in 2025, dropping 38 percent to US$59 billion, with North Africa experiencing a particularly severe decline, according to a report published on January 20 by UN Trade and Development (formerly UNCTAD).
The Global Investment Trends Monitor report highlights that North Africa attracted just US$17 billion in 2025, down from US$51 billion in 2024, a staggering 67 percent fall. The previous year’s surge had been driven largely by the Ras El-Hekma tourism and urban development megaproject on Egypt’s Mediterranean coast, led by Abu Dhabi Developmental Holding Company, the sovereign wealth fund of Abu Dhabi.
Sub-Saharan Africa proved far more resilient, receiving US$42 billion in FDI last year, a decline of just 6 percent from 2024. Analysts said the region’s smaller drop reflected a more diversified investment base and ongoing interest in sectors such as telecommunications, financial services, and extractive industries.
Overall, Africa’s FDI performance mirrored broader trends across developing economies. Flows to these countries fell 2 percent to US$877 billion, representing 55 percent of total global FDI. Low-income nations were hit hardest, with three-quarters of least developed countries reporting stagnant or declining investment.
By contrast, developed economies saw a strong rebound, with FDI surging 43 percent to US$728 billion. This increase was largely concentrated in Europe and global financial hubs. The European Union recorded a 56 percent rise, buoyed by large cross-border mergers and acquisitions and a recovery in major economies including Germany, France, and Italy.
At the global level, FDI rose 14 percent to roughly US$1.6 trillion in 2025. However, much of this increase over US$140 billion was attributed to flows routed through financial centers, suggesting that underlying investment activity remained weak. Excluding these transit flows, global FDI grew only about 5 percent, underscoring persistent uncertainty in international investment.
The UN report also highlighted a 10 percent decline in international investment in infrastructure projects. A sharp slowdown in renewable energy developments, prompted by regulatory uncertainty and reassessed revenue risks, was a major factor. Domestic investors increasingly stepped in to bridge some of the gaps, but UN Trade and Development cautioned that reliance on local financing could exacerbate infrastructure shortfalls in countries dependent on international funding for large-scale projects.
Experts warned that the uneven FDI trends reflect broader geopolitical and economic pressures. Rising tensions, trade frictions, and economic fragmentation continue to weigh on cross-border investment, while African economies face the additional challenge of attracting investors in a highly competitive global market.
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Looking ahead, UN Trade and Development forecasts only a modest recovery in global FDI flows for 2026. Analysts said African economies, particularly North Africa, will need targeted policies and reforms to regain investor confidence and offset the sharp losses recorded last year.
