Africa enjoyed a 9% y/y increase in FDI in 2024, report shows

Africa recorded a 9% year-on-year increase in foreign direct investment (FDI) projects this year, albeit still 22% below prepandemic levels from 2019, EY Africa’s latest yearly ‘Africa Attractiveness 2024’ report shows.

This growth contributed to the creation of more than 205 000 jobs, supported by a $164-billion capital investment across 798 projects.

The new report, published on December 2, focuses on FDI in Africa and offers a comprehensive analysis of FDI trends across the continent, highlighting significant growth in key metrics despite a global economic backdrop of uncertainty. 

"Despite global economic challenges, Africa has demonstrated resilience and attractiveness for FDI in 2024, with notable growth in job creation and project numbers.

“The shift towards renewable energy underscores the continent's commitment to sustainable development, aligning with global sustainability trends,“ EY partner and Africa government and infrastructure industry leader Sandile Hlophe said. 

The report indicates a 7% increase in the total FDI score from 2022, reflecting a robust recovery. This score has doubled from its low in 2021 at the height of the global health crisis.

Job creation associated with FDI projects recorded a significant 33% rise from 2022, with employment opportunities growing more than threefold since the pandemic troughs.

However, capital investment declined by 16% from 2022, though it remained 138% above prepandemic levels, highlighting the continent's sustained appeal to investors.

The distribution of FDI across African countries showed varied dynamics.

“Egypt emerged as a leader, not only in job growth but also in capital investments, despite a significant drop in FDI value from $107-billion in 2022 to $40-billion in 2023. Egypt's overall FDI score stood at 77.2, leading the continent,” Hlophe said.

South Africa led in the number of FDI projects, followed by Egypt and Morocco, with these three nations collectively accounting for 47% of all projects on the continent. Mauritania secured the second-highest capital investment at $34-billion, primarily from a single renewable energy project.

Source countries for FDI into Africa also presented varied contributions. China was the top job creator, accounting for 17% of the jobs created in 2023, followed by the US at 13% and the UK at 11%.

The United Arab Emirates emerged as the top investor in terms of capital, contributing $44-billion, while the US led in the number of projects with 90 initiatives, although there has been a noted decrease in US capital investment since 2016.

The UK achieved the highest overall FDI score, performing well across all metrics.

The sectoral focus of FDI in 2023 has shifted towards sustainability.

“Renewable energy dominated with half of all FDI capital investment, with $83-billion invested in this sector,” Hlophe noted.

The electronic components sector attracted $6.9-billion in capital investment, driven by the renewable sector's growth. Traditional sectors like food and beverages and software and IT services continued to be significant contributors to job creation.

"The concentration of investment in renewable energy is not just a trend but a testament to Africa's potential in leading global green initiatives. This sector's growth is critical for sustainable development and economic resilience," Hlophe said.

The EY Africa Attractiveness Report for 2024 portrays Africa as being increasingly appealing to global investors, with a strong focus on sectors that ensure long-term sustainability and growth.

“While challenges remain, particularly in aligning FDI with local economic development needs, the trends suggest a robust future for African economies in attracting and leveraging foreign investments,” Hlophe said.