Five trends to watch in Africa’s economic and political outlook for 2025

Africa’s economic landscape ended 2024 on a positive trajectory, with several economies showing signs of recovery. Economic imbalances are improving, and significant strides have been made to address sovereign debt pressures.

According to the Economic Intelligence Unit (EIU) report titled – Africa outlook 2025: Driving investment opportunities amid political pressures, “Attracting more inward foreign direct investment (FDI) has proved difficult for many African states in recent years, but foreign investment targeting Africa is expected to edge higher in 2025.” the report states.

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Although external debt and servicing costs remain high, many of the continent’s largest and most vulnerable markets have negotiated additional assistance or restructuring agreements. Despite these gains, Africa faces considerable challenges, including regional rivalries, social unrest, and an evolving global geopolitical environment. The region will remain a dynamic yet volatile player on the global stage in 2025.

Here are five trends to watch in Africa’s economic and political outlook for 2025

Africa’s Economic Dynamism

In 2025, Africa will dominate the list of the world’s fastest-growing economies, with three-quarters of the top 20 performers located on the continent. Over 40 African nations are projected to achieve faster economic growth than in 2024. Key factors driving this growth include robust international trade, strengthening intra-regional trade, expanding services sectors, and industrial development. These trends signal continued economic potential across the continent, offering opportunities for investors and policymakers.

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Foreign Investment Prospects

Africa’s ability to attract foreign direct investment (FDI) has been constrained in recent years. However, FDI targeting the continent is expected to increase in 2025. Major sectors attracting investment include hydrocarbons, mining, renewable energy, financial technology, information and communications technology, agro-processing, pharmaceuticals, e-commerce, logistics, and light manufacturing. These investments reflect the continent’s growing importance as a hub for innovation and industrial development.

AGOA Renewal

The African Growth and Opportunity Act (AGOA), a key trade framework between the United States and African nations, is up for renewal in 2025. The agreement is expected to be extended, though with adjustments for specific countries. The renewal offers a potential foreign policy advantage for the US administration, strengthening its strategic partnerships in the region. For Africa, AGOA’s continuation provides an avenue for trade expansion and deeper economic ties with the United States.

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Geopolitical Rivalries

Geopolitical tensions are expected to intensify across Africa in 2025, with a focus on the Horn of Africa. Ethiopia’s relationships with Egypt, Eritrea, and Somalia are likely to face further strain. At the same time, global powers—including the United States, the European Union, China, Russia, and Gulf Arab states—will compete for strategic influence in the region. These rivalries will shape political and economic alliances, impacting regional stability and development.

Social Unrest Risks

Despite positive economic growth forecasts, the risk of social unrest remains high in many African nations. Socioeconomic inequalities, political grievances, and unmet expectations could spark protests, demonstrations, or rioting. While a continent-wide uprising is unlikely, pockets of intense civil unrest could emerge, posing risks to governments and businesses. Addressing these issues will require proactive policies that address root causes and foster social cohesion.