Africa wrapped up 2024 on an encouraging note, with several economies showing signs of stability and progress. Efforts to correct economic imbalances and tackle sovereign debt challenges have started to yield positive results.
A report from the Economic Intelligence Unit (EIU), titled Africa Outlook 2025: Driving Investment Opportunities Amid Political Pressures, highlights that while attracting foreign direct investment (FDI) has been a challenge in recent years, investment interest in Africa is anticipated to rise in 2025.
Key Developments to Watch
1. Strong Economic Growth
In 2025, Africa is expected to lead global economic growth, with the continent hosting the majority of the world’s fastest-expanding economies. More than 40 African countries are projected to achieve higher growth rates compared to 2024. This economic momentum will be driven by factors such as increased regional and international trade, growth in service industries, and advancements in industrial production. These trends present vast opportunities for businesses and investors looking to tap into Africa’s evolving markets.
2. Surge in Foreign Investment
Despite previous hurdles, foreign direct investment into Africa is expected to gain traction in 2025. Key sectors poised to attract investors include energy (particularly renewable energy), mining, financial technology, e-commerce, agro-processing, telecommunications, and pharmaceuticals. This renewed interest in Africa underscores the continent’s potential as an emerging industrial and technological hub.
3. AGOA Trade Agreement Renewal
The African Growth and Opportunity Act (AGOA), which facilitates trade between Africa and the United States, is set for renewal in 2025. While adjustments for specific countries may be introduced, the agreement’s extension is anticipated. For Africa, AGOA presents an opportunity to deepen trade relations with the U.S., while offering the American government a strategic foothold in the region’s economic landscape.
4. Rising Geopolitical Tensions
Political rivalries are expected to escalate, particularly in the Horn of Africa, where Ethiopia’s relationships with neighboring countries such as Egypt, Eritrea, and Somalia remain strained. Additionally, major global powers—including the U.S., China, the European Union, Russia, and Gulf states—are likely to intensify their competition for influence in Africa, shaping political and economic dynamics across the continent.
5. Social Stability Concerns
While economic prospects look promising, the risk of social unrest remains a pressing issue. Persistent inequalities, political discontent, and unfulfilled economic expectations could trigger protests and civil disturbances in several countries. Addressing these challenges will require deliberate policies aimed at promoting inclusive growth and addressing the root causes of discontent.
As Africa moves into 2025, the continent’s economic and political landscape will remain dynamic, offering both opportunities and challenges that policymakers, investors, and stakeholders must carefully navigate.
