The past year brought developments that should reap political, economic and cultural opportunities for Africa in 2025. A summation of the most important of these shows an economically maturing Africa, gaining prominence on the world stage.

Each new year brings new opportunities for investment and business deals that are made possible by encouraging economic developments, which in turn are facilitated by promising political developments. The year 2025 offers new opportunities based on 2024’s advancements, which established trends that seem likely to come into greater focus in the months ahead. This article discusses five forecasts that are likely to influence the fortunes of investors in 2025.

1. More spending on climate, facilitated by global agreements

Of all continents, Africa has been hardest hit by famines, droughts and floods as a result of global warming. The New Collective Quantified Goal (NCQG), including the means to obtain the NCQG’s Africa-specific target of at least US$300-million per year by 2035, was negotiated at the end of 2024 at the UN Climate Change Conference in Baku. The undertaking will begin in 2025. Funding mechanisms include grants, multinational institutional guarantees, Forex risk instruments and other financing tools. However, the funds that can be raised for the achievement of the NCQG still fall short of the amount that Africa requires to mitigate the negative impacts of climate change. According to the Independent High-Level Expert Group on Climate Finance, a total cost of US$2.3-trillion is required annually to finance climate action in emerging markets globally, including Africa.

A major contributor to closing the financial gap will be carbon trading. This scheme allows polluting industrial countries in the Americas, Asia and Europe to purchase carbon credits from Africa’s relatively pollution-free countries. The price of carbon credits rises and falls but seems set to rise in 2025. According to the UN’s Economic Commission for Africa (ECA), trade will increase in Africa in 2025, and if the carbon price were to reach US$80 per tonne, up to 200-million jobs could be created on the continent if the resulting financial windfall is directed toward.

2. Russia’s military influence diminishes, allowing Western investment to return

Western businesses have been excluded from Burkina Faso, Mali and Niger after the overthrow of their governments by military juntas, which quickly became military dictatorships with Russia’s support. Moscow’s strategy for gaining international influence involves sowing chaos by financing proxies to destroy democratic institutions and becoming close allies with the resulting authoritarian regimes. As a result, Western economic and security interests were overturned, while Russia gained exclusive access to valuable natural resources. Why this matters to Africans is that Western investors operate in a free market economy under laws of transparency, whereas deals dictated by juntas are prone to corruption. Russia is paying for West African assets by boosting juntas, with no profit going to the countries’ peoples.

However, the ability of juntas in those three African countries to withstand civilian rule has suffered a setback in 2024 because of the reversal of Russia’s international power. Russian President Vladimir Putin has significantly weakened his country’s economy, military and national morale with his unsuccessful war against Ukraine. The toppling of Syria’s Assad regime in December 2024, which operated as a terror state much like those imposed in the three West African countries, was another blow to Moscow’s influence.

In 2025, the three Sahel juntas were initially expected to strengthen their mutual coalition, the Alliance of Sahel States. Instead, they are likely to reconsider their frequently broken promises to establish a timetable for a transition to civilian rule. A return to civilian governance would mean outside investment, and Western companies are ready to resume operations where they left off.

3. Businesses are drawn to growing BRICS power

The alliance originally composed of Brazil, Russia, India, China, and South Africa (BRICS) has become the most attractive international body to join for developing countries. In 2024, BRICS saw the admission of Egypt and Ethiopia from Africa and, from beyond the continent, Iran, Saudi Arabia and the United Arab Emirates. Russia may be diminished militarily and politically, but it still entices new African connections with its discounted wheat for BRICS members. This is one reason business leaders in Algeria, Nigeria and Uganda are lobbying for their governments to join the BRICS bloc. Another inducement to join BRICS is African investors’ long-standing frustration with the US dollar’s monopoly over world trade.

In 2025, BRICS will offer investors greater trade opportunities with the launch of exchanges for grain, minerals and precious metals. Of course, some of the interest in BRICS comes from actors who perceive BRICS’ institutions as less regulated compared to the oversight that governs international trade in the US dollar. If BRICS is to become an independent economic force in competition with the dollar, its financial institutions must be legitimate and secure. If this is achieved, the next step is a highly anticipated BRICS currency. Where the African Union has long failed to find continent-wide interest in an African currency, BRICS may offer an alternative, with the groundwork being established for investors in 2024.

4. Lower inflation leading to interest cuts to boost investment while infrastructure pays off

Statistics can be misleading and must be understood in context, not as isolated indicators. For example, the International Monetary Fund forecasts that South Sudan will have the highest GDP growth in the world in 2025 at 27.2%. However, this growth originates from the very small foundation of one of Africa’s most impoverished countries that has been plagued by a protracted civil war. Similarly, Niger and Senegal are forecast to enjoy significant economic growth in 2025; however, this growth is based on oil exports, and long-term investors know that oil investments are problematic in a world that seeks to move toward new, clean and sustainable energy sources.

According to the ECA, continent-wide financial trends have more resonance with investors, such as most African countries lowering their inflation and many reserve banks’ cutting their interest rates, which benefit businesses and make loans cheaper. Additionally, investment in infrastructure has been ongoing in Côte d’Ivoire, the Democratic Republic of Congo and Rwanda. Such investments are responsible for these countries positions on the ECA’s list of five countries that will experience the highest economic growth in 2025 (along with Niger and Senegal). Investment in energy, rail, roads and water and sanitation provide services required by investors to open and run businesses and get their products to market.

5. Expanded global trade ties

One sign of African countries’ progress towards becoming greater global economic players is the developing nimbleness of African markets to adapt to changing circumstances. This will be put to the test with the installation of a new US government in January 2025, which promises to bring protectionist policies like tariffs on African goods, and a possible risk of African industries dependent on the US’s African Growth and Opportunity Act benefits. A new US isolationism will diminish interest in Africa overall, and activity that remains will be ad hoc transactional deals. However, African countries are already working to strengthen regional trade using the African Continental Free Trade Area. A new focus on European markets is likely in 2025, as well as the exploration of bilateral trade agreements with the Middle East and Asia.

Meanwhile, in 2025, South Africa’s President Cyril Ramaphosa will see his first year as chairman of the Group of Twenty (G20). This is a massive intergovernmental economic forum made up of 19 countries, and two regional unions: the European Union and the African Union. G20 members constitute 85% of the global economy, 75% of world trade and 67% of the global population. With South African leadership at the helm of this economic powerhouse, African interests will be heard during a new year of shifting economic alliances.

The critical points:

• Investment in African energy and infrastructure are paying off for investors by providing the necessities required to transport goods and run businesses
• International alliances like BRICS and global economic groups like the G20 will be increasingly important for Africa in 2025
• Lower inflation and interest rates make doing business in Africa a more attractive proposition

Written by In On Africa