Foreign direct investment (FDI) in Eastern and Southern Africa reached unprecedented heights in 2024, totaling a record $65 billion. The surge highlights the region’s growing appeal for investors and underscores the need for continued fdi growth southern africa and strategic investment promotion COMESA.
Record FDI Amid Global Slowdown
Despite a global 11% decline in FDI flows, the Common Market for Eastern and Southern Africa (COMESA) saw a 154% increase across its 21 member economies. Much of the spike was driven by Egypt’s Ras El-Hekma urban development project. Even excluding this mega-project, FDI inflows grew 16%, reflecting robust fdi trends in eastern africa and strong investor confidence.
COMESA’s Expanding Global Share
In 2024, COMESA doubled its share of global FDI from 2% to 4%, while accounting for 7% of inflows to all developing economies, up from 3% the previous year. International project finance (IPF) flows surged 93% to $79 billion, with major investments in grid expansion, renewable energy, and infrastructure projects across Egypt, Tunisia, Rwanda, and Malawi.
Greenfield investments remained strong, totaling $77 billion and representing two-thirds of Africa’s greenfield activity. This trend demonstrates COMESA’s position as a leading hub for long-term, capital-intensive projects in urban development and sustainable energy.
Regional and Sectoral Investment Patterns
Five countries—Egypt, Ethiopia, Uganda, the Democratic Republic of the Congo, and Kenya—absorbed 90% of COMESA’s total inflows. Intra-COMESA investments remain low, representing just 3% by project volume and 6% by value, highlighting the need for broader regional participation to ensure inclusive growth.
Construction investments nearly quintupled, largely due to Egypt, while basic metals rose 75%. Energy and gas supply maintained their top position as FDI recipients. Conversely, extractive industries fell 61% and ICT investments dropped 55% following 2023 peaks.
Investments linked to Sustainable Development Goals showed mixed results. Renewable energy FDI surged 67%, and human-capital-related sectors like health and education grew 130%. However, agrifood systems fell 34%, water and sanitation declined 76%, and infrastructure investment contracted 54%, indicating persistent financing challenges.
Policy Recommendations for Sustained Growth
The UNCTAD report emphasizes five priorities for COMESA economies:
- Expand the investment base beyond a few leading economies.
- Accelerate industrialization through value-added manufacturing and local supplier development.
- Scale up digital infrastructure to bridge the ICT investment gap.
- Focus on human capital sectors with innovative and blended financing.
- Improve data reporting for evidence-based policymaking.
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This story was first reported by UNCTAD. Read the full article here.
