- In Africa’s 2025 race for investments, winners showed how reform works: Namibia’s index jumped because of green policies, Morocco made $4.8Bn because of stability, and Egypt’s IMF halo brought in $10Bn.
- Kenya’s fintech ecosystem and South Africa’s markets attracted a wide range of bets. These countries cut down on red tape, made ESG standards the same, and used AfCFTA to up trade.
- On the other hand, losers hurt themselves. Nigeria’s security problems scared away $2Bn in foreign direct investment in oil. The war in Sudan and the indigenization laws in Zimbabwe led to almost no new money coming in.
Africa’s 2025 race for investments experienced huge undercurrents including geopolitical shocks, climate change, and a post-pandemic search for stable returns, waves that influenced how capital went into key sectors of the continent’s economy.
Statistics show that foreign direct investment (FDI) into the continent fell 42 per cent in the first half of the year to $28 billion. This is a big drop from the highs of 2024, when megaprojects drove up investment.
But under this overall decline, a story of sharp differences began to unfold: Eastern and Southern Africa set records with $97 billion in inflows, thanks to renewables and renewed interests in critical minerals.
North Africa, on the other hand, saw a big drop. Private equity deals hit a five-year low in the first half of the year, but by the third quarter, there had been 341 transactions, a 17 per cent increase from the previous quarter.
Additionally, there were a lot of new bonds issued in the sovereign debt markets, from South Africa’s $3.5 billion bond rush to a domestic debt boom that grew to almost $500 billion across the continent.
Across the year, fintech and green energy segments became very popular with investors, bringing in billions of dollars, while extractives stayed relevant despite efforts to diversify. This reset wasn’t random; it put reformers up against people who didn’t want to take risks. It showed how political stability, policy flexibility, and sector bets determined who got rich and who went hungry. As investors look ahead to 2026, Africa’s story is one of rising from the ashes despite ongoing problems.
Africa’s 2025 race for investments: The Foreign Direct Investment (FDI) Rollercoaster
Africa’s FDI narrative in 2025 was a paradox of contraction and concentration. UNCTAD’s data from the middle of the year painted a grim picture: inflows fell by half from previous highs, due to high interest rates, currency fluctuations, and election-year uncertainties in 15 countries.
North Africa took the biggest hit. Its 2024 windfall from Libyan gas and Egyptian reforms disappeared as projects stalled. But the east and south roared back, with FDI rising to $97 billion, a record that was even higher than before COVID, thanks to extractives and infrastructure.
Namibia stole the show by moving up 10 places in the Greenfield FDI Performance Index and outperforming its peers by almost eight times. Its plans for green hydrogen and the return of uranium attracted Scandinavian and Gulf sovereign funds, which put $2.5 billion into mining alone.
Morocco did the same thing, bringing in $4.8 billion through phosphate expansions and solar hubs. Its stable monarchy and trade agreements with the EU protected it from unrest in the region. Egypt, which has $10 billion in foreign direct investment (FDI) commitments, took advantage of the Suez Canal’s logistics and IMF-backed reforms, but the Sinai insurgencies dampened investor enthusiasm.
On the other hand, the big companies in West Africa failed. Nigeria, the continent’s economic giant, was only expected to grow by 3.2 per cent even though its population was growing by 2.6 per cent. Its foreign direct investment fell by 15 per cent to $3 billion as oil theft and problems with the naira kept explorers away.
Furthermore, insecurity hurt its reputation around the world, with foreign companies saying that banditry and persistent kidnappings in the north of the country were deal-breakers.
Zimbabwe and Sudan, which are both under sanctions and in civil war, had more money leaving than coming in. Their combined foreign direct investment fell to less than $500 million, showing how conflict can lead to capital flight.
These differences point to a larger trend: Africa’s FDI has stayed below 5 per cent of the world’s total for the past 10 years, and it is very focused on resources. But 2025 was a turning point. Since then, three-quarters of all greenfield announcements have come from “future-shaping” industries such as renewables, tech, and logistics. UNCTAD says that this change requires changes to policies to direct flows beyond extractives.
Private Equity’s Comeback in 2025
Private equity (PE) in Africa was just as unstable as foreign direct investment, but it showed signs of growth. After a bad first half of the year, when deals hit a five-year low because of U.S. rate hikes and foreign exchange risks, things got back to normal. There were 109 transactions worth $1 billion in the first quarter and 147 in the second quarter. By the third quarter, 341 deals had been made so far this year, showing that the market was still strong, with values up 2 per cent from the previous year despite a “market recalibration.”
Financial services took up 40 per cent of the business, while fintechs filled in the gaps in inclusion. Kenya and Nigeria hubs, which will be home to 55 per cent of VC in 2024, kept their grip on the market. Exits were mostly Private Equity buyouts in established tech companies.
The African Private Capital Association (AVCA) says that things will keep going well in the second half of the year, thanks to intra-African funds like TLcom’s $155 million raise for climate-resilient agrotech.
Hubs were key to success: South Africa’s JSE listings brought in $800 million in private equity for renewable energy, and Egypt’s startups made $1.2 billion even though there weren’t enough dollars.
In unstable countries, failures were likely. Ethiopia’s Tigray scars and Mozambique’s insurgency put a stop to $300 million in planned infrastructure deals. The OECD’s Africa Capital Markets Report says that deeper local-currency instruments are needed to unlock Private Equity’s potential. It also says that only 14 countries have had corporate issuances since 2000.
Read also: How African economies dealt with the 2025 debt maturity wall
Sovereign Debt Markets
Sovereign debt markets gave them a lifeline, with new Eurobonds worth $15 billion and domestic bonds worth four times as much since 2010. In September, South Africa made a big splash by selling $1.75 billion each in 12- and 30-year notes at yields of 6.25 per cent and 7.375 per cent. This started a “bond rush” to rebuild reserves after ratings upgrades. Côte d’Ivoire and Benin came in first with a total of $3.2 billion. Their cocoa and cotton prices went up, which lowered premiums.
According to the African Debt Database, domestic debt, which is often ignored, grew to $500 billion by the end of 2024, faster than external obligations. Pension funds and banks drove this change, which reduced forex risks but increased fiscal strains in high-debt countries such as Ghana (90 per cent GDP).
What’s more, Fitch’s neutral outlook for 2026 dampens hopes: four upgrades in 2025, but Cameroon and Rwanda are still on negative watches because of oil price drops and budget shortfalls.
An expert panel has suggested a G20 refinancing push that would give climate-vulnerable debtors $100 billion in swaps. But the IMF warns that sub-Saharan growth at 4 per cent hides fiscal cliffs—revenue increases and debt management are necessary for continued access.
Fintech, green energy, and extractives are the top sectors right now
Available data shows that Fintech was the star of 2025, with embedded finance expected to reach $13.2 billion and grow by 11.2 per cent each year. Kenya got $638 million, or 29 per cent of all funding on the continent, through M-Pesa changes and AI lending.
Nigeria’s Moniepoint got a $200 million Series C, which will help 10 million small and medium-sized businesses get online. According to the IFC, eight of the nine African unicorns are fintechs, and their business models are “investable” even when the economy is tough.
In the first half of the year, EMEA fintech funding reached $13.7 billion, with Africa getting 15 per cent of that. There are still problems, such as regulatory silos in French-speaking countries, but AI integrations could save $50 billion by 2030.
Green Energy: Putting Three Times as Much Money on Solar and Hydrogen
According to the IEA, investments in clean energy have tripled private flows to $40 billion since 2019. Africa, which has 60 per cent of the world’s solar potential, has been pushing for equity. The EU’s “Scaling Up Renewables” package of €618 million and the World Bank’s Mission 300, which promised $50 billion to electrify 300 million people, made things look better.
Namibia and Kenya were in the lead, with solar power adding 40 per cent of new capacity. Morocco’s Noor complexes attracted $2 billion in foreign direct investment. But according to the AfDB, Africa only gets 2 per cent of the world’s green money, which shows that there are still gaps in financing for off-grid solar.
Extractives: Important Minerals in a Time of Change
Extractives, which have been a major source of foreign direct investment in Africa for a long time, changed with critical minerals at the center. The Eastern and Southern surges are linked to lithium and cobalt, and U.S. deals are sending $5 billion to Zambia and the DRC for electric vehicle supply chains.
The Upstream Act in South Africa opened up $1.5 billion worth of gas, but Brookings says that “win-win” needs to be met by processing it locally to stop the problems caused by raw exports. Policies are important. Angola’s OPEC price hikes brought in $3 billion, but artisanal problems in the Sahel kept ESG funds away.
The Geography of Capital: Who Wins and Who Loses
Winners showed how reform works: Namibia’s index jumped because of green policies, Morocco made $4.8 billion because of stability, and Egypt’s IMF halo brought in $10 billion. Kenya’s fintech ecosystem and South Africa’s markets attracted a wide range of bets, with inflows per person doubling those of other countries. These countries cut down on red tape, made ESG standards the same, and used AfCFTA to trade with each other.
On the other hand, losers hurt themselves. Local reports say that Nigeria’s security problems scared away $2 billion in foreign direct investment in oil. The war in Sudan and the indigenization laws in Zimbabwe led to almost no new money coming in, which made defaults worse.
As Studocu’s analyses show, structural problems like market failures and small domestic bases made things worse. Brookings’ Foresight Africa says that 70 per cent of sub-Saharan debt is in trouble and calls for comprehensive solutions.
Plans for Balanced Flows by 2026
Next year, Africa needs to be brave: according to the OECD, it needs to deepen its capital markets and put more emphasis on foreign direct investment qualities like jobs over volumes. AfDB is hoping for 5 per cent growth through integration, and successes like Namibia’s show that policy flexibility is more important than endowments. Investors still face risks, but the $13 billion fintech frontier and the $40 billion green surge offer new chances. Africa’s capital chronicle isn’t the end; it’s the start of a fair rise.
