Foreign direct investment trends in Sub-Saharan Africa

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The United States and the European Union maintain the largest foreign direct investment (FDI) stock in sub-Saharan Africa. The substantial scale of these investments, with the US and the EU accounting for 16.30% and 36.14% of the total FDI stock in 2023, respectively, indicates that these countries will remain the largest holders of FDI stock in the region over the next five years.

The growth in FDI into the region is being sourced from other countries. Significant growth in FDI has been recorded from Singapore, Gulf Cooperation Council (GCC) members and India, with FDI stock increasing by 37.5%, 35.2% and 30.4%, respectively, based on a compound annual growth rate (CAGR) from 2010 to 2023.

African Business reports that the number of Singapore-based companies operating in Africa increased from about 60 in 2018 to over 155 as of 2023, reflecting a growing interest driven by financial technology (fintech) innovations and strategic partnerships.

Singaporean private-sector firms lead the way in facilitating cross-border transactions and connecting African financial ecosystems, bolstering the e-payment sector. Singaporean private-sector firms are also investing in e-government services and in providing logistics solutions in West and Central Africa. 

The GCC’s growth in investments in Sub-Saharan Africa is driven primarily by its goals of securing strategic supply lines, enhancing trading capabilities, and meeting the growing demand for critical minerals. Further GCC investments in the region were announced during 2024 and a renewed strategic interest suggests that the GCC’s high investment figures are likely to be sustained.

A notable area of focus is maritime investment. For example, port management and expansion contracts entailing expenditure of around US$3 billion have allowed the UAE’s DP World port operating and logistics company to build up a chain of facilities under its control spanning from Senegal to Angola, Mozambique and Somalia. The company announced in June 2024 that it would spend another US$3 billion in port investment in Africa over the next three to five years.

Additionally, in South Africa, Saudi Arabia has announced a substantial investment of 9.5 billion rand (approximately US$513 million) aimed at constructing a platinum smelter and base metals refinery in Limpopo province. Saudi Arabia is also planning to acquire a stake in Barloworld, a leading South African industrial processing company, signaling a strong commitment to enhancing resource-based ties and development within the region. 

The Indian private sector has emerged as one of the leading investors in sub-Saharan Africa, with investments spanning multiple sectors, including telecommunications, pharmaceuticals, agriculture and energ

Indian private-sector investments are increasingly focused in the coal sector, which is crucial for India’s energy security, as the country relies heavily on coal imports to meet its electricity generation needs. This strategic interest has led Indian companies to engage in coal exploration and mining projects in coal-rich African nations such as Mozambique.

Furthermore, intra-regional FDI in sub-Saharan Africa has also grown in recent years, accounting for an average of 21% of the region’s total inward FDI stock from 2020 to 2023, according to World Bank analysis of data from the IMF’s Coordinated Direct Investment Survey. This intra-regional share of FDI in sub-Saharan Africa is more than double the share observed in Latin America and the Caribbean and four times the share recorded in the Middle East and North Africa during the same period.

Looking ahead to 2030, we project greater reliance on intra-regional investments, as sub-Saharan Africa countries aim to enhance their economic resilience and reduce dependence on traditional Western investors, supported by the African Continental Free Trade Area (AFCFTA).

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—By Robert Matthee, Thea Fourie, John Raines, Laurence Allan, Deepa Kumar

This article was published by S&P Global Market Intelligence and not by S&P Global Ratings, which is a separately managed division of S&P Global.