- In 2025, trends among foreign investors yielded diverse results in key markets across Africa. While inflows into Kenya declined, foreign direct investment into Nigeria was driven by oil; in Egypt mega projects attracted funding, while in South Africa it was all a combination of factors.
- Nigeria’s foreign direct investment (FDI) grew by 3.2%, with the majority of the money coming from the energy sector (75%). The $35 billion Egyptian deal for Ras El-Hekma increased foreign direct investment by 50%, with a focus on infrastructure.
As the African investment scene evolves, foreign investors face a complex mix of opportunities and risks. This raises an important question: are they returning selectively or are they planning a permanent retreat?
This year, the Nairobi Securities Exchange (NSE) showed that foreign participation had fallen sharply, from 46.68 percent in the second quarter to 30.12 percent in the third quarter, the lowest level in fifteen years. However, there are still areas of selective interest, thanks to strong sectors and stabilizing policies. This trend can be seen in key markets such as Nigeria, Egypt and South Africa. It is a sign of larger changes caused by currency fluctuations, perceptions of capital controls and geopolitical tensions.
In 2021, foreign direct investment (FDI) inflows into Africa reached a record high of $83 billion. However, by 2024 they had fallen to $60 billion due to the global decline. The story for 2025 is one of cautious re-engagement in areas of high potential. According to the African Development Bank’s Economic Outlook, the African economy is expected to grow by 3.7 percent in 2025. Investors need to understand this behavior to benefit from this growth.
Foreign investors in Kenya: Participation is declining, but only in certain areas
The Kenyan NSE is a good example of how foreign investors are “thinning out”. In September 2025, participation was only 28.01 percent, compared to 31.28 percent in August. According to the Kenya Wall Street report, foreigners were net sellers in seven out of nine months, selling KSh7.4 billion in September alone.
This mass exodus, which was the largest in 2025, differs from the NSE’s 15 percent stock gain in the third quarter, which added KSh367 billion in wealth. But selective returns are taking place: foreign inflows returned in October, focusing on top stocks, while the shilling stabilized at KSh128.5–129.5/USD. The S&P’s upgrade to a stable ‘B’ outlook in August lifted people’s mood and showed that they are confident that Kenya will handle its debt even though its GDP ratio stands at 68 percent.
According to NSE’s unaudited second quarter results, which showed a turnover of KSh2 trillion, this mixed behavior shows that locals dominate the market (70 percent of turnover) while foreigners wait for value.
Banking, telecom and energy sectors are the three main factors attracting foreign investment in Africa
Although foreign investment is declining overall, investors in Africa 2025 are focusing on stable sectors such as banking, telecoms and energy, which promise stability in times of change. Banking provides money for digital innovation.
In Kenya, KCB Group and Equity Group counters at the NSE posted gains of 32 percent and 34 percent respectively, attracting foreigners looking for high returns (6-10 percent). According to IMARC’s fintech report on South Africa (15.85 percent CAGR to 2033), the telecom sector, with Safaricom’s green bond oversubscribed by 175 percent, shows how AI and digital adoption are growing.
Energy, especially renewables, is booming: Foreign direct investment in Africa’s energy sector rose 75 percent in 2024, with Egypt’s Ras El-Hekma project bringing in $35 billion from the UAE. These industries represent 30 percent of foreign direct investment (UNCTAD, 2025) and protect against currency risks. For example, telecom companies such as MTN in South Africa provide a return of 20 percent.
The fact that some foreigners are returning here shows they are willing to take risks on fast-growing, defensive assets on a continent expected to receive $83 billion in foreign direct investment (FDI) by 2025.
How FX Volatility Affects Foreign Investors in Kenya in 2025
The currency’s volatility has had a major effect on how foreign investors trade in Kenya in 2025. The changes in the shilling have made people less likely to invest and believe there is more risk. Volatility reached 20 percent in the first quarter due to interest rate hikes in the US, which resulted in KSh 3.35 billion leaving the country in the first week of September (Trading Room, 2025).
A 2025 IMF study found that exchange rate volatility makes it more difficult for people in SSA to get private credit by 15 percent. Kenya’s NPL ratio of 14.9 percent shows how difficult this is. People were more cautious because they thought there were capital controls, even though there weren’t. Moody’s Caa1 rating in 2025 mentioned currency risks.
But when the value of the KSh stabilized at KSh 128.5/USD in August, some people started buying again as the S&P “B” upgrade indicated that controls had improved. This volatility has damaged confidence and foreign direct investment (FDI) has fallen by 28 percent. However, sectors that are still doing well show that foreigners are willing to bet on recovery.
Also read: Private individuals drive increase in Safaricom’s green bond supply, majority of which is paid through M-PESA
Comparison of trends among foreign investors in Kenya, Nigeria, Egypt and South Africa
In 2025, foreign investors will behave very differently in Africa. For example, the inflow in Kenya is decreasing, while that in Nigeria is driven by oil, that in Egypt by mega projects and that in South Africa by a combination of factors.
According to UNCTAD 2025, Nigeria’s foreign direct investment (FDI) grew by 3.2 percent even as its population grew. Most of the money came from the energy sector (75 percent). Egypt’s $35 billion deal for Ras El-Hekma increased foreign direct investment by 50 percent, with an emphasis on infrastructure (World Bank, 2025).
Telecoms and renewable energy grew by 75 percent in South Africa, while the AI market was worth $360 million, according to consultancy McKinsey. Kenya’s 30 percent foreign investment is less than South Africa’s 40 percent, but the selective inflow of banks and telecoms is comparable to Egypt’s project focus. Currency volatility affects everyone.
For example, according to Reuters, the Nigerian naira lost 35 percent of its value. However, the Kenyan perception of controls makes matters worse, while the South African rand remains stable. Overall, African foreign direct investment (FDI) fell by $83 billion in 2021. However, the selective re-entry into the energy and telecommunications sectors in 2025 shows that structural changes are taking place and not a complete exit.
Are foreign investors done with Kenya, or are they just waiting for the right price? With the currency market stabilizing and sectors remaining strong, selective re-entry seems likely. Investors should keep an eye on financial market trends and policy changes to find good buying opportunities.
(1USD=KSh128)
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