The future of Africa will be shaped by investment rather than aid

After two hours the cavalcade reached its destination: Kabanga, home to one of the world’s prime untapped sources of nickel, a metal used in batteries for electric vehicles. Though geologists first discovered its potential 50 years ago, it is only now that the site may become a mine, under the majority ownership of Lifezone Metals, an American-listed firm.

That is partly because of renewed enthusiasm for African minerals. Kabanga is one of a number of projects that has attracted the attention of the American government, which is keen to invest in critical minerals. But the interest in Kabanga also reflects improvements in the surrounding infrastructure—such as grid connections to the site, tarmacked roads and a new railway—that have been funded, at least in part, by African financial institutions mobilising money from within the continent.

Kabanga is just one project in Tanzania, which is just one of Africa’s 54 countries. But it is emblematic of two broader shifts with potentially profound consequences. The first is that many foreign investors are taking a closer look at Africa, whether because of its natural resources, recent improvements in its economic outlook or favourable demographic changes. The second, more important shift is that Africans are doing more to make Africa investable and are increasingly putting their own money to work. This trend is personified by Aliko Dangote, the continent’s richest man, who, having opened a $20bn refinery in Nigeria in 2023, is eyeing projects elsewhere.

These shifts are nascent. The progress they signify could stall because of poor governance or the destabilising effects of a prolonged crisis like, if it drags on for months, the war in Iran. But after a quarter of a century when Africa was for many, at least in the West, synonymous with aid, the next 25 years will look very different. For more people both inside and outside the continent, Africa will mean business.

Continental shift

The growth of Africa will be one of the defining stories of this century. At present the continent accounts for about 20% of the global population, but just 3% of global GDP and 2% of worldwide trade—and it receives less than 1% of private capital. By 2050 Africa’s population may well have risen from 1.5bn to 2.5bn, taking its global share to 28%. But whether this proves a boom or a burden depends in part on the capital Africa can attract.

In 2024 Bridgewater, one of the world’s largest hedge funds, roughly estimated that sub-Saharan Africa had only half the “development financing resources”—tax revenues, aid, loans from multilateral institutions, foreign direct investment (FDI) and the like—that it requires for the sort of productivity gains that would narrow its gap with the rest of the world. The Africa Growth Initiative, an arm of the Brookings Institution, an American think-tank, estimates that sub-Saharan Africa needs $245bn in extra finance per year, or more than 10% of the region’s GDP.

For those skimming headlines about Africa, such a prospect may seem remote. Higher oil and fertiliser prices—both consequences of the war in Iran—will feed into African economies. Bilateral aid from Western donors to sub-Saharan Africa fell by as much as a quarter last year relative to 2024, according to the OECD, a club of mainly rich countries. China has gone from providing tens of billions of dollars in credit in the 2010s to now getting more in repayments than it extends in loans.

Yet the economic importance of aid can be easily exaggerated. The continent receives less in aid than it does in FDI and remittances (see chart 1). The IMF forecasts economic growth to be higher in Africa this year than in the Asia-Pacific region.

Optimism has been apparent in bond and equity markets. African sovereign debt has its highest average ratings since 2020, according to S&P, a credit-rating agency. The value of African “Eurobonds” (denominated in non-local currency) sold to foreign investors in the first part of 2026 marks the best start in a given year for the market since 2013, says Bloomberg. In 2025 several African stockmarkets, including South Africa’s, the continent’s largest, recorded record highs. (The Iran war has reversed some but not all of the gains.)

From 2022 to 2024 Africa attracted more greenfield FDI (going to new projects rather than acquiring, say, a mine already in operation) than did South-East Asia. FDI into COMESA, a group of 21 countries in east and southern Africa, saw the largest increase among any regional grouping globally in 2024. Venture-capital deals worth some $4bn were sealed in Africa in 2025, almost four times more than in 2020. The volume of private credit deals in Africa rose by almost a quarter. The value of inbound M&A deals into Africa was 40% higher in 2025 than in 2024, notes Herbert Smith Freehills Kramer, a law firm.

For some foreign investors Africa’s appeal remains its resources. America is trying to loosen China’s stranglehold on various critical minerals. Part of the solution lies in Africa, where the estimated worth of undeveloped mineral assets is $8.6trn, three times Africa’s GDP. “Without the African continent all is lost,” says Robert Friedland, the founder of Ivanhoe Mines, a Canadian firm that jointly operates one of Congo’s largest mines.

“The momentum is real and doesn’t come along very often,” says Chris Showalter, CEO of Lifezone Metals. In a sign of the new stress on “commercial diplomacy”, America has made it known to Samia Suluhu Hassan, Tanzania’s president, that its support for her is based on her ability to make progress on three projects: Kabanga, a graphite mine, and a liquefied natural gas (LNG) project involving ExxonMobil, an American energy giant.

In the Democratic Republic of Congo a fund backed by the American and Abu Dhabi governments is bidding for 40% of Glencore’s stakes in two mining operations. America is also supporting a bid by three former American military officers to buy Chemaf, a copper-cobalt asset.

Others are piling in, too. International Resources Holding, an Emirati conglomerate, bought a majority stake in a Zambian copper mine in 2024 and a tin mine in Congo in 2025. Also last year the Qatar Investment Authority, a sovereign-wealth fund, took a $500m stake in Ivanhoe, and Japan and India agreed to a partnership to invest in African minerals, among other things.

Though China is lending less, its firms are busier than ever. In November Guinea finally started operations at Simandou, one of the largest iron-ore projects in the world, backed by several Chinese firms and Rio Tinto, an Anglo-Australian mining giant. In the last two years Chinese firms bought a rare-earths project in Tanzania, a copper mine in Botswana and gold mines in Congo, Ghana and Ivory Coast. Kabanga has attracted interest from several Chinese companies. In August two Chinese firms bought tens of thousands of hectares in Angola to grow soyabeans and grain.

For Europe Africa offers chances to diversify its energy sources. In January TotalEnergies, a French energy giant, resumed construction of a $20bn LNG project in northern Mozambique. In February ENI, an Italian firm, announced two new African discoveries of oil and gas.

Gulf investment in Africa may decrease in the near term but the continent’s potential in logistics and food, two priority areas for Middle Eastern investors, will remain. Last year Saudi Arabia’s Public Investment Fund (PIF) paid $1.8bn for a controlling stake in Olam Agri, a Singaporean agribusiness firm with a big presence in Africa. Invictus, a Sudanese-Emirati agricultural trader, is expanding across the continent in an effort to rival Olam. Last year Vision Invest, a Saudi Arabian firm which is focused on infrastructure, took a stake in Arise IIP, which runs industrial sites (across 14 African countries) at which raw materials are used to make processed goods (such as cotton for T-shirts). In 2023 DP World, a ports and logistics firm based in Dubai took over the running of the port of Dar es Salaam, from which nickel from Kabanga would be exported.

Animal spirits

Other investments can be seen as bets on the world’s fastest urbanising region with its rising consumer class. Chinese firms are building apartment blocks in big cities like Dar es Salaam and Nairobi. Asahi, a Japanese beermaker with ageing customers at home, last year paid $2.3bn for a stake held by Diageo, a British distilling giant, in East African Breweries.

Venture capital in Africa, though a fraction of the global total, has helped produce several unicorns (companies valued over $1bn), including Flutterwave, a Nigerian payments firm, which reportedly expects to go public in the next few years. (The London Stock Exchange is trying to attract African listings as a way to boost its disappointing record of tech listings.) “Africa feels like Sweden 20 years ago,” says Hans Otterling, an investor who made a fortune via Spotify and now invests in Africa. “This is not charity. This is showing the rest of the world you can make money in Africa.”

There have been bursts of enthusiasm from foreign investors in Africa before. But the context this time is different. In part because of the shock of tariffs and aid cuts, African policymakers are doing more to open up their markets and reduce frictions between African countries. At the same time African capitalists are also spending more money at home. “The era of aid or free money is gone,” says Akinwumi Adesina, ex-president of the African Development Bank (AfDB). “Africa must now learn to develop via investment discipline.”

Part of the story is what individual countries are doing. South Africa’s liberalisation of its state-owned enterprises is attracting investment in its power and other industries. The spending by Tanzania that has made Kabanga a more enticing prospect—on roads, rail and energy—is a reminder of the steady progress in infrastructure in many places. From 2025 to 2029 more railways will be built in Africa than in the previous ten years, according to the Africa Finance Corporation, a Lagos-based outfit (see map).

Then there are continent-wide efforts to better integrate Africa’s labour, product and capital markets. Today 31 countries offer e-visas to other Africans, up from nine in 2016. The African Continental Free Trade Area (AfCFTA) would be the largest duty-free area in the world by number of inhabitants if fully implemented. It was first announced in 2012, but it is only recently that goods have actually been traded through a pilot project called the Guided Trade Initiative.

Separately, AfCFTA has streamlined rules around data and, via the Pan-African Payment and Settlement System, has also allowed many African firms using different currencies to trade without first having to exchange local currency into greenbacks. The World Bank estimates that full implementation of the AfCFTA could boost FDI by up to 120% and increase intra-African investment by 85%.

Mr Dangote has cited the potential of the AfCFTA as one of the reasons for his recent investments. At his refinery on the outskirts of Lagos, the main nerve centre resembles a NASA mission’s control room. More than 50 screens show the myriad elements of the complex: fuel refineries, a fertiliser plant and a polymer-processing facility. He tells The Economist he wants to expand both the fuel and fertiliser parts so they are the biggest in the world.

Last year he announced a $2.5bn fertiliser project in Ethiopia and $1bn-worth of deals in Zimbabwe. He then reels off a list of other potential schemes, including mining projects in central Africa and a vast industrial park in Nigeria that uses the gas produced from his refinery. “We believe in Africa, and we’re investing despite all the hurdles in Africa,” he says.

Rostam Azizi, a Tanzanian industrialist and another of Africa’s richest men, is busy making huge investments of his own. In August Africa’s largest liquefied petroleum gas (LPG) terminal, which Mr Azizi is building, is likely to begin operations in Kenya after years of delay. His firm, Taifa Group, also plans to invest $500m in Zambian industry in the next two years, starting with the supply and distribution of LPG. “We’ve got the gas and they need gas,” Mr Azizi says. “Soon they won’t need to worry about supply from anywhere else.”

Mr Dangote and Mr Azizi show how the most promising—and potentially consequential—development of all is the growth of African firms (see chart 2) and especially of their investments in Africa. For though it is foreign investors who are often blamed for seeing Africa as too risky, African investors have long been wary too. Many have tried to park their money in ostensibly safer places like Dubai. The more than $1trn in assets on the balance-sheets of pension funds, insurance funds and the like have long been skewed towards government bills and bonds.

Might this finally be changing? Richard Okello, the CEO of Sango Capital, a pan-African investor, argues that there is a “quiet tsunami” that has largely gone unnoticed, but “the waves are about to break”. A new batch of sovereign-wealth funds have mandates to invest in infrastructure. Hitherto sleepy pension funds are getting bigger, partly because of the compounding effects of time and demography (when fertility rates fall, as they are doing in Africa, savings rates tend to increase) and partly because of regulatory changes that are having a sneakily big impact.

Last year Kenya expanded tax relief on pension contributions, leading to an influx of deposits. Ghana mandated that 5% of its state pension fund’s investments go to private equity and venture capital. South Africa made similar changes two years earlier. Smaller funds, such as Uganda’s and Rwanda’s, are now making similar moves.

Nearly 50% of venture capital raised last year came from African investors. Initial public offerings outside South Africa, once a rarity, are becoming more common as institutional investors seek equity investments on the continent. Africa-focused infrastructure investors are also expanding. The Africa Finance Corporation increased its investments to $4.5bn last year, roughly $2bn more than its total in the previous two years, according to Samaila Zubairu, its CEO.

Mr Zubairu argues that his outfit meets the latent demand, inside and outside the continent, for an African investor who can set up deals that are ready to go, once financed. “Our view is that Africa has a lot of potential but not enough bankable projects,” he argues. His managers on the ground ensure that projects, whether wind farms, railways, smelters, gas plants or gold mines, have the infrastructure and regulatory approvals needed to get from blueprint to real-world operation. In projects such as the extension of the Lobito Corridor to Zambia (an American- and EU-backed railway that currently goes from Angola to the Congo copperbelt) his bank invests risk-bearing capital, so is on the hook for first losses. Yet he notes that his loan-loss ratio is 0.7%, towards the lower end of what is normal for global banks.

Better together

“If local capital invests, foreign capital follows,” says Hendrik du Toit, CEO of Ninety One, an Anglo-South African asset-management firm. These sorts of joint investments may increasingly be a part of Africa’s future. Hakainde Hichilema, Zambia’s president, and a former businessman (he is one of the few world leaders with an MBA), says there has been a “sea change” in how deals are done in Africa. Rather than things being done to Africa, as he puts it, deals are increasingly “partnerships”.

Some of the old-line investors in Africa, like development funds from rich countries that focus on boosting private firms in emerging markets, are already investing alongside African peers. In June British International Investment, Britain’s private-sector development arm, struck a deal to invest across Africa with South Africa’s Public Investment Corporation, one of the largest asset managers on the continent.

Anecdotally African fund managers also say there is a sense among some of their rich clients outside the continent that, when America is more volatile, Europe is ageing and China is slowing, Africa is worth a bit more of an allocation. The chaos in the Gulf may lead to a reassessment of its riskiness, too. It probably also helps that African investments tend to have low correlations with assets based in other countries. With increasingly active investment by Africans themselves, the time is ripe. “We’re showing people that, yes, OK, it can happen also here,” says Mr Dangote. “Because if we don’t, there’s nobody that can come and do it for us.”

Sign up to the Analysing Africa, a weekly newsletter that keeps you in the loop about the world’s youngest—and least understood—continent.