Africa investment climate improving but more reforms required

African countries have been making significant strides in attracting foreign direct investments despite facing various challenges such as the impact of COVID-19, geopolitical tensions, high inflation rates, and interest rates. These challenges have not deterred countries in the continent from working towards improving their economic indicators and attracting investment opportunities. Dr. Sidi Ould Tah, Director General at Arab Bank for Economic Development in Africa, highlighted the recent positive developments in the African investment landscape during an interview with CNBC Africa. Dr. Sidi Ould Tah emphasized the importance of attracting foreign direct investment, especially from regions like the Arab world, to support the development of resources in African countries. He mentioned that sectors such as mining and agriculture, particularly food security, hold great potential for investment in the continent. Africa's vast uncultivated arable land and the need for fertilizers present opportunities for investors to contribute to the agricultural sector, which could serve as a food basket for Arab countries. One of the key factors for attracting the right investment partners, according to Dr. Sidi Ould Tah, is ensuring profitability and predictability in the investment environment. Stable legal, institutional, and regulatory frameworks are essential for investors to have confidence in the longevity of their investments. The presence of conducive business conditions and protection against risks like expropriation are crucial for fostering a favorable investment climate in African countries. Looking ahead to 2025, Dr. Sidi Ould Tah expressed optimism about the investment outlook for the continent. He highlighted the role of development finance institutions, such as the Arab Bank for Economic Development in Africa (Badea), in supporting governments to attract foreign direct investments. These institutions play a crucial role in assisting countries in developing regulations, promoting investments, providing favorable debt conditions for infrastructure projects, and offering risk mitigation mechanisms through guarantees to help investors manage risks effectively. In conclusion, while African countries have shown progress in attracting foreign direct investments and improving economic indicators, there are still challenges ahead. Enhancing the investment climate by ensuring stability, predictability, and investor protection will be key to sustaining the momentum of investment inflows into the continent.