In February 2022, the EU and the African Union hosted a joint summit, the sixth in a series since 2000. Billed as a “reset” of Europe–Africa relations, it had been postponed from 2020 due to Covid-19. Much fanfare accompanied it, especially the announcement from the European side that half of the Global Gateway finance, a 2021 commitment to spend €300bn on global development between 2021 and 2027, would be spent in Africa, in a blend of both public finance and private investment.

European investors, given their colonial legacies in African countries, already have significant in-roads on the continent. In 2018, foreign direct investment (FDI) from Europe accounted for close to 50% of total stocks in Africa. But growth of European FDI has been slow — barely keeping up with African economic growth, which has quadrupled since 2000. European FDI has also been primarily focused on oil and gas and other extractive sectors, and in generally low value-added, low-tech activities.

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Ghana, known as one of the largest and most stable economies in Africa, is currently in the midst of an economic crisis; its population is suffering from a lack of access to food and fuel due to rising inflation. Riots broke out in Ghana at the start of July as a result of the poor economic conditions. Ghanaian President Nana Akufo-Addo blamed such conditions on the effects of the pandemic and the Russia-Ukraine war, noting that ‘the economy has [instead] begun to firm up and the cedi has systematically appreciated against the dollar…’. Ghana, in trying to alleviate the dent in its economic growth, has sought the assistance of intergovernmental bodies in the past, such as the International Monetary Fund (IMF). When Ghana last sought the assistance of the IMF in 2015, it received $980 million through an extended credit facility arrangement, equal to 180% of its quota. They have since ruled out seeking IMF assistance a second time, with the Finance Minister of Ghana stressing that the country is committed to managing its finances without assistance from the multilateral institution.

So what is the alternative?

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Africa is home to the fastest growing, and youngest, population on the planet, the world’s largest free trade area and a significant amount of natural resources including 65% of Earth’s arable land. While birth rates are falling, especially in the developed world, the United Nations expects Africa’s population to confound this decline and double by 2050 if growth rates on the continent continue the current trajectory.

Amid Africa’s explosive growth, the U.S.-Africa Leaders Summit, hosted by the Biden administration, is a promising sign that the U.S. will indeed be prioritising Africa across its foreign-policy in the coming years. This is a significant opportunity for the Biden administration to showcase how it views the future of U.S.-Africa relations on its home turf amid increased geopolitical tension, and how it intends to increase cooperation on shared global priorities.

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Venture capital deployed in Africa in 2022 grew compared with 2021 and the continent was the only one to attract more venture capital than in the prior year, which indicates growing trust in the broader investment ecosystem.

There are, however, still a lack of companies providing early-stage solutions, venture capital development company Founder Factory Africa investment manager Philani Mzila said this week.

"Africa needs more instruments to develop companies, especially smaller technology-based companies. For example, an agricultural technology company in Kenya, despite being principally a software company, has to pay a lot to secure equity.

"However, such a company should not need to rely solely on equity funding to support its growth, but should rather have access to other instruments, such as grant or debt funding. Therefore, it would be ideal if there were more players in the investment ecosystem to provide competition and greater risk appetite," he said.

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The Africa Continental Free Trade Area (AfCFTA) was established in 2018 to provide opportunities for the world to benefit from the continent’s economies and businesses.

A new report from the World Economic Forum, AfCFTA Secretariat and Forum partners provides tools and strategies for leveraging the new trade area’s opportunities.

Four sectors – the automotive industry, agriculture and agro-processing, pharmaceuticals, and transportation and logistics – were analyzed in the report as they are expected to accelerate in production and trade volumes under the AfCFTA.

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Private investments can ameliorate or exacerbate conflict in fragile countries depending on the extent to which they are subtractive or additive to the local capital stock.

Private sector involvement in peacebuilding processes has been promoted and aided since the early 2000s, especially by multilateral agencies. Evidence of this interest is traceable in official strategies and reports such as the current UN Peacebuilding Fund 2020–24 Strategy which argues that “increasing engagement with the private sector, for example by expanding pilots with social impact investment bonds, encouraging SMEs to invest and employ in higher risk areas […] is a key goal for the next few years”. This explicit call for private sector involvement in fragile countries illustrates its importance in understanding the impact it can have on conflict and the wider society and environment.

For this reason, we leveraged our on previous studies (Sonno, 2020; Sonno and Zufacchi 2022) and systematised the available evidence concerning the effect of private investments on civil conflicts in developing countries, by focusing on multinational companies in the African continent.

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• Angola, and Ethiopia are projected to overtake Kenya as the third and fourth largest economies in sub-Saharan Africa, respectively, according to the International Monetary Fund (IMF).
• Kenya's slower GDP growth, caused by factors such as the Covid-19 pandemic, drought, and disruptions in global supply chains, contributes to its potential fall in economic rankings.
• The decline in Kenya's economic standing may weaken its ability to attract foreign direct investment (FDI), which is crucial for addressing the continent's high youth unemployment rates.

The International Monetary Fund (IMF) has recently projected that the economies of Ethiopia and Angola are set to overtake Kenya in terms of size, potentially weakening Kenya's ability to attract investors with its growing consumer market.

According to the IMF, faster GDP growth in Angola and Ethiopia will see Kenya relegated to the fifth spot in sub-Saharan Africa's economic rankings. Nigeria is projected to remain the largest economy on the continent, while Angola's return to growth, linked to higher oil prices, saw the country overtake Kenya last year, ending years of recession.

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