Why Africa’s FDI landscape remains resilient

Key regional dynamics highlight Africa’s appeal to investors seeking both market and investment growth opportunities. North Africa led the continent across major foreign direct investment metrics. These include job creation and capital investment, with Egypt achieving Africa’s highest overall FDI score. Sub-Saharan Africa (SSA) displayed strong growth in new projects, led by South Africa, while Kenya and Nigeria were also in the top five.

As the world continues to seek sustainable energy solutions, Africa’s abundant energy sources (sun, wind and water) and its commitment to renewable energy generation have drawn substantial investment. Renewable energy accounted for half of all foreign direct investment in 2023, with projects like Mauritania’s US$34b green hydrogen initiative highlighting Africa’s role in the global energy transition.

These trends reveal that Africa’s FDI landscape is rebounding and evolving, driven by several factors. "Investments span a wide range of sectors, from renewable energy to business services, highlighting a diverse abundance of investable sectors," says Ajen Sita, EY Regional Managing Partner, Africa. "Intra-regional investments that foster economic integration are steadily gaining momentum in Africa."

In sum, foreign direct investment led to the creation of 205,000 jobs across Africa in 2023. The total capital investment reached US$164b, a 138% increase over the pre-pandemic levels of 2019, while the number of projects, at 798, rose by 9% from the previous year.

Regional economic dynamics highlight the abundance of investment growth opportunities, with certain regions excelling in job creation, capital investment and project volume.

Foreign direct investment into Africa reflected an array of source countries, with each major investor contributing uniquely to the continent’s growth. "Top investors – China, the UAE and the United States – emerged as leaders in job creation, capital investment and project count, respectively, highlighting Africa’s global appeal across multiple sectors," says Roderick Wolfenden, EY Partner and Markets Leader, Africa.

China led in FDI-related job creation with a 270% increase over the 2022 level, accounting for the highest job creation rate among all source countries. Over the past five years, Chinese investment has generated over 102,000 jobs in Africa, representing 15% of all FDI-related jobs on the continent.

The UAE was the top capital investor in Africa, contributing US$44b in capital investment – nearly equalling the combined investments of the second- and third-largest providers of capital (the UK and China, respectively). This substantial capital inflow targeted the renewable energy sector, highlighted by the Mauritania green hydrogen project. The UAE’s investment establishes it as a major player in Africa’s green transition.

The United States led in the number of projects, with 90 across Africa, marking its influence in high-growth sectors like software and IT services and business services and communications. Although the US was not a leading provider of capital in 2023, it increased investment levels from US$7b to US$9b, and its broad sectoral focus reinforces its active role in Africa’s economic landscape. The UK achieved the highest overall FDI score due to its balanced contributions across jobs, capital and projects, reflecting its diversified approach to investment in Africa.

Intra-regional investment saw African countries contributing to 14% of total projects within the continent. South Africa, Kenya and Nigeria led these investments. The African Continental Free Trade Agreement (AfCFTA) is intended to foster cross-border trade and economic integration, further boosting intra-African investment. While intra-Africa FDI accounts for only 5% of jobs and less than 3% of capital, it holds significant potential to strengthen local economies.

Foreign direct investment in Africa highlighted three standout sectors — renewable energy, food and beverage and business services — which collectively showcase Africa’s potential as a sustainable, self-sufficient and service-oriented economy.

Half of all the foreign capital invested in Africa went to renewable energy, totalling US$83b. Africa’s renewable energy generation potential makes it a prime location for renewable energy projects, which could address the continent’s energy needs while ensuring energy security. Although capital investment declined by 30% from its 2022 peak, investment in renewables has surged more than eightfold since 2019.

Food and beverage led the way in terms of jobs created by foreign direct investment, with significant growth, particularly in West Africa. Investments in local food production and processing have been spurred by post-pandemic recovery efforts and the drive toward reducing dependence on imports. Nigeria has seen considerable growth in food and beverage job creation, supported by Africa’s large and growing population and increasing demand for locally produced goods.

From a business services perspective, South Africa led the continent in the number of projects. This reflects a strong demand for IT and support functions. Business consulting, IT and technology services are particularly attractive to foreign investors, and their growth is in part driven by Africa’s growing digital infrastructure and tech-savvy youth. North Africa, particularly Egypt and Morocco, also received substantial numbers of projects in business services, supporting the growth of their service economies.

These sectoral trends highlight the diversification of Africa's FDI landscape. Investments are increasingly directed toward renewable energy, which is driving electrification and fostering a green economy. Additionally, local food production is being enhanced, boosting resilience and self-sufficiency. The service sectors are positioning Africa as a burgeoning hub for business and technology services.

Egypt, Mauritania, Nigeria and South Africa exemplify Africa’s diverse investment appeal across strategic sectors, from renewable energy to manufacturing and business services.

Foreign direct investment in Africa is being shaped by sustainability, economic diversification and financial inclusion.

The continent’s commitment to renewable energy not only positions it as a key player in the transition to sustainable, low-carbon economies but also highlights the critical role of these investments in bridging the electricity access gap. "With its abundant renewable resources, the continent offers environmentally conscious investors a unique strategic advantage while addressing the urgent need for widespread electricity access." says Sandile Hlophe, EY Africa Government and Infrastructure Leader.

And by drawing foreign investment across a range of sectors – food and beverage, business services, electronics and technology – the continent is reducing its reliance on traditional sectors like oil and mining.

Fintech and mobile money investments are helping reshape Africa’s financial landscape by opening access to banking services. These innovations empower unbanked populations, encourage entrepreneurship and stimulate inclusive economic growth. East and West Africa are at the forefront of this fintech development, with investment flows supporting a digital financial ecosystem that enables social mobility, financial security and wider economic participation across Africa.

These themes reflect Africa’s evolving FDI landscape, highlighting the continent’s ability to attract investment that aligns with global priorities:

• Environmental sustainability and access: renewable energy projects harness Africa’s unique resources, supporting long-term climate goals and enhancing energy security.
• Economic stability through diversification: investments across diverse sectors reduce economic risk, creating a balanced and adaptable economy.
• Inclusive financial growth: fintech and digital financial services foster equity, support small business growth, and drive social mobility.

Africa’s evolving FDI landscape aligns with global priorities in sustainability, economic resilience and financial inclusion. The continent’s emphasis on green investments, industrial diversification and fintech growth offers a solid foundation for sustained, inclusive development. The continent’s competitive advantages – including abundant natural resources, a young, tech-driven population and an expanding digital infrastructure – position it as a key player in renewable energy, technology and services.