Africa’s FDI Stuck at 4–6% Despite Global Investment Surge, New Report Warns
Africa’s share of global foreign direct investment (FDI) has remained trapped between 4% and 6%, according to a new report by the Pan-African Manufacturers Association (PAMA). The findings, published in its March 2026 Manufacturing Review, paint a concerning picture of Africa’s struggle to attract and retain meaningful industrial capital despite global investment growth.
The report highlights a widening imbalance in global capital flows, noting that while worldwide FDI rose by 14% to $1.6 trillion in 2025, investment into Africa fell sharply by 38% to just $59 billion. Analysts say this decline reflects deeper structural weaknesses rather than short-term market shifts, especially as Africa continues to miss out on high-value manufacturing investments.
PAMA describes the continent’s current investment environment as one of “extreme volatility and shallow industrialisation,” arguing that most capital inflows are still concentrated in extractive industries and low-value services. The report warns that this pattern limits job creation, industrial upgrading, and integration into global value chains.
Regional disparities remain significant. North African economies such as Egypt and Morocco are leveraging trade links with Europe to build stronger automotive and textile manufacturing hubs. In contrast, Southern Africa is facing capital outflows, with South Africa alone recording negative inflows of $6 billion due to divestments and investor withdrawals.
The report calls for a major shift in Africa’s investment strategy, urging governments to move beyond broad “openness” policies toward targeted, stable, and performance-driven frameworks. It also stresses that infrastructure gaps—particularly unreliable electricity, logistics inefficiencies, and a shortage of technical skills—continue to undermine competitiveness. PAMA further recommends deeper regional integration under the African Continental Free Trade Area (AfCFTA), including industrial value-chain projects such as the DRC–Zambia battery and electric vehicle corridor, as a model for transforming Africa’s manufacturing future.
source: punch