Africa's 75% FDI surge signals renewed investment climate

June 26, 2025

 

Weekly African Market Insights

June 26, 2025

Executive Summary

Africa's economic resilience shines with projected 3.9% GDP growth for 2025 despite global headwinds [1][10][25] . Foreign direct investment surged 75% to $97 billion in 2024, led by renewable energy and digital infrastructure [74] . Inflation diverges regionally, with South Africa at 2.8% [3][11] while Sudan faces double-digit pressures [8] . Senegal emerges as the fastest-growing economy at 8.4% [52] , while Rwanda posts strong 7.8% Q1 growth [47][48] .

Detailed Insights

Economic Indicators

  • Growth: 21 African economies will exceed 5% growth in 2025, led by Ethiopia, Niger, Rwanda, and Senegal targeting 7% [1][25] . Regional variance persists: East Africa leads (5.9%), Southern Africa lags (2.2%), and South Africa projects 0.8% growth [10][14] .

  • Inflation: South Africa maintains 2.8% inflation (below SARB target) but faces upside risks from weather and tariffs [3][11] . Contrastingly, 15 countries endure double-digit inflation, with interest payments consuming 27.5% of government revenue [10][20] .

  • Currencies: Tunisian Dinar (2.96/USD) and Libyan Dinar (5.44/USD) are Africa’s strongest, while the South African Rand stabilizes at 18.10/USD [12] .

Foreign Direct Investment (FDI)

  • Africa attracted $97 billion FDI in 2024 (+75% YoY), driven by renewable energy and urban development [74] . South Africa recorded ZAR 11.7 billion inflows in Q1 2025 [55][71][72] .

  • Sector Focus: 46% of startup funding targets fintech [64] , while telecoms invest $45.2 billion in network expansion [66] . The EIB committed $100 million to AXIAN Telecom for 4G/5G rollout in Tanzania and Madagascar [70] .

Sectoral Developments

  • Technology: Africa hosts 8 fintech unicorns, including dominant players in payments and blockchain [63] . Fintech revenues projected to hit $47 billion by 2028 [64] .

  • Renewables: Solar PV capacity to surge 42% in 2025; 18 countries will install ≥100 MW [57] . Desert to Power initiative targets 10 GW across 11 Sahel nations [59] .

  • Infrastructure: Lagos-Calabar Railway (Nigeria), Bagamoyo Port (Tanzania), and Grand Inga Dam (DRC) advance among Africa’s top 10 megaprojects [67] .

Policy & Geopolitics

  • AfCFTA implementation advances with customs modernization to boost intra-African trade [65][69] .

  • Debt sustainability concerns persist: Public debt averages >60% of GDP, with servicing costs rising [28][75] .

Investment Opportunity Spotlight

1. Senegal’s Energy Sector

Catalyst: Oil/gas production launch at Greater Tortue Ahmeyim and Sangomar fields [52] .
Opportunity: Direct exposure to 8.4% GDP growth (Africa’s highest) via upstream investments and LNG infrastructure.
Risk Mitigation: Partner with IFC-backed developers to navigate regulatory shifts.

2. Pan-African Solar Expansion

Catalyst: 42% projected market growth in 2025; $17 billion committed to projects in Egypt, Morocco, and Namibia [57][74] .
Opportunity: Invest in EIB/World Bank-funded initiatives like Benban Solar Park (Egypt) for yield stability.
Risk: Capital costs remain 3–7× higher than in developed markets; leverage de-risking instruments like SEFA [57][59] .

Forward-Looking Perspective

Short-Term (Q3–Q4 2025): 
Growth: East Africa’s dominance to continue, fueled by Ethiopia’s manufacturing and Kenya’s tech resilience [42][46] . Nigeria’s GDP may reach 3.2% with oil sector recovery [44][40] .
Risks: Climate shocks (e.g., droughts in East Africa) and tariff-driven inflation could pressure currencies [11][27] .
Catalysts: AfCFTA customs harmonization deadlines and banking recapitalization (Nigeria, Kenya) to unlock capital [40][69] .

Key Monitorables

  • AfDB’s Mission 300 progress (50 million new electricity connections by 2030) [59][62] .

  • IMF debt sustainability talks with Zambia, Ghana, and Ethiopia [28][32] .

  • Q2 FDI data (July 15) and AfCFTA implementation milestones [65][74] .

Sources & References

© 2025 African Market Insights | Weekly Intelligence Report

Disclaimer: This report is for informational purposes only. Always conduct independent research and consult financial advisors before making investment decisions.