Economic Information Bulletin No. (EIB-242) 34 pp
Foreign Direct Investment in Africa: Recent Trends Leading up to the African Continental Free Trade Area (AfCFTA)
The African Continental Free Trade Area (AfCFTA) connects 1.3 billion people across 55 countries and presents a significant opportunity for increased economic growth in Africa. AfCFTA may also spur increases in foreign direct investment (FDI) on the continent by reducing regulatory barriers and expanding market access. This report examines emerging trends in FDI in Africa that may further shift under AfCFTA, including assessing the sources and destinations of private investment in the region. European investors remain the most important source of FDI stock in Africa, but the relative share of Africa’s FDI stock originating from Europe declined over the past decade, while Asia’s share increased. The study also covers U.S. FDI in Africa. The destinations of FDI in Africa also shifted, with Northern and Southern Africa—which made up the majority of FDI stock in the mid-2000s—losing FDI share to Eastern Africa. Additionally, this report studies sectoral investment patterns to better understand where private investors identify new opportunities. A particular focus is on the food and beverage sector because it directly connects to the economic development strategies of many AfCFTA signatory states and has implications for deepening agricultural value chains and food security.
Keywords: AfCFTA, Africa, African Continental Free Trade Area, free trade areas, trade integration, foreign direct investments, FDI, greenfield investments
In this publication...