Foreign Investment in Africa Could Reward Investors Who Look Beyond the Continent’s Credit Crisis

Foreign investors continue to fund major projects across Africa, while many local businesses struggle with expensive bank loans. Mining, energy and infrastructure are attracting overseas capital despite the continent’s financing difficulties.

Africa received about $70 billion in foreign direct investment in 2025, according to UN Trade and Development (UNCTAD). That was below the $94 billion recorded in 2024 but remained the third-highest annual inflow since 1990.

The money is unevenly distributed. A few countries account for much of the investment, and large one-off deals have pushed some ahead of others. Their performance over the past five years offers a clearer picture of where foreign capital is concentrated.

Foreign Investment in Africa Concentrates in Five Markets

Egypt attracted $88.4 billion in foreign direct investment between 2021 and 2025, the highest in Africa, according to UN Trade and Development (UNCTAD). South Africa followed with $53.5 billion, Mozambique $19.3 billion, Ethiopia $19 billion and Uganda $14.1 billion.

Egypt’s lead was boosted by $46.6 billion in 2024, largely from the UAE-backed Ras El-Hekma project. South Africa received over $40 billion in 2021 following a major corporate restructuring but recorded $2.3 billion in net outflows in 2025.

Mozambique attracted $5.7 billion in 2025, while Ethiopia received $3.8 billion. Uganda’s annual inflows more than doubled from $1.6 billion in 2021 to $3.4 billion in 2025.

Guinea emerged among the leading destinations in 2025 with $7.8 billion, while Nigeria attracted $4 billion. Mining projects in Guinea and oil and gas investment in Nigeria point to the industries drawing fresh foreign capital.

Foreign Investment in Africa Follows Energy and Minerals

Electricity and gas projects dominate Africa’s planned foreign investments. According to UN Trade and Development (UNCTAD), announced projects were valued at $289 billion between 2021 and 2025, compared with $86 billion in the previous five years.

Planned investment in extractive industries rose from $56 billion to $71 billion over the same periods. Guinea’s iron ore deposits and the Democratic Republic of Congo’s copper and cobalt resources have attracted mining companies seeking new supplies.

Solar, wind and hydrogen projects have secured foreign backing in Egypt, Morocco and South Africa. Investors from the Gulf and Asia are also financing energy and infrastructure developments across the continent.

The value of newly announced greenfield projects fell by nearly a third in 2025, although project numbers increased. Turning these plans into operating businesses requires financing, which remains expensive for many African companies.

Foreign Investment in Africa Reveals a Financing Divide

Access to finance remains difficult for African businesses. The OECD’s 2025 Capital Markets Report found that 31% of firms across 23 African countries considered financing their biggest obstacle, compared with 17% globally.

Local banks are also lending more to governments relative to businesses. IMF data show that public-sector credit in sub-Saharan Africa reached 46 cents for every dollar lent to private borrowers in the third quarter of 2025, up from 35 cents in 2020.

The African Development Bank estimated Africa’s unmet trade-finance demand at $74 billion to $92 billion in 2024. Foreign-currency shortages made it harder for banks to finance importers and exporters.

Multinational companies can borrow abroad or secure funding from parent companies. Smaller African businesses often rely on local banks, leaving them exposed to high interest rates. Foreign-backed projects face similar difficulties when local suppliers cannot obtain enough credit to fulfil contracts.

Foreign Investment in Africa Hinges on Returns

Africa could attract more foreign capital if governments improve security, maintain political stability and establish predictable tax policies. These conditions would give investors greater confidence to finance projects with long repayment periods.

New investments could expand the tax base through company profits, employment and local business activity. How much governments collect will depend on tax incentives and enforcement. Spending that revenue on reliable electricity and transport could lower costs for businesses.

Future investment decisions will depend heavily on these improvements. Countries that reduce operational risks and provide dependable infrastructure could secure more long-term projects, giving investors better prospects for returns.