Africa after aid is more resilient than you might think

You might think that Africa would be in the midst of a crisis. The four largest donors all cut their aid spending in Africa last year, according to initial data. America slapped some of its highest tariffs on African countries. China, the continent’s largest bilateral source of loans for most of the 21st century, today receives more from Africa in debt repayments than it extends in new credit. On top of all that, the war in Iran will increase the cost of fuel and fertiliser.

Yet African countries look resilient. The IMF reckons that in 2026 economic growth will be higher in Africa than in Asia, hitherto a rare occurrence. Of the 15 fastest-growing countries anywhere, 11 are expected to be on the continent. The picture partly reflects high commodity prices and booming populations. But it is also revealing of something more profound: the rise of Africa as a destination for investment, not charity.

To be sure, there is not one Africa. Some of the continent is at war (Sudan) or unstable (the Sahel). But the most economically important parts are not. Internal strife can co-exist with thriving industries even within the same country: take, for example, energy or fintech in Nigeria. And though aid remains vital to the budgets of the poorest places, for the larger economies it is a rounding error.

Before the outbreak of the third Gulf war, animal spirits were on something of a safari. In the first two months of 2026 the value of bonds issued by African countries on capital markets was higher than during any equivalent period since 2013. The ratings of African sovereign bonds remain at a five-year high. Last year many African stockmarkets reached record highs. The price rises for fuel and fertiliser, and therefore food, caused by the war may stunt these movements. But there are three reasons to be optimistic that the investment case for Africa will continue to be promising.

The first is that Africa is attracting a wider range of foreign investors than ever. In 2024 the continent received a record amount of foreign direct investment: at $97bn, about a third more than the inflow of aid. For both America and Europe, Africa has grown in importance as a source of critical minerals and a destination for infrastructure spending. The chaos in the Gulf may redouble European firms’ interest in African energy projects, whether oil, gas or renewables, a shift that began when Russian tanks rolled into Ukraine in 2022. China, though lending less, is trading at or near record levels with the continent. The Gulf states may rethink some of their investments, given the damage caused by the war, but they will still have an appetite for Africa’s agricultural and mineral riches.

A second reason is that African policymakers have made their economies more resilient. Inflation slowed down in most countries last year in part because of prudent central bankers. Market-friendly reforms in Nigeria and South Africa will boost these large economies and their surrounding regions. Efforts to reduce intra-African barriers to trade, capital flows and movement of people are picking up. More than twice as much rail may be laid in the next ten years as in the past decade.

The third reason for optimism is probably the most crucial: African investors are starting to put more of their capital into Africa. In 2024 the 500 largest African firms recorded their highest-ever revenues in dollar terms. As these firms grow, they are reinvesting in new projects. This trend is exemplified by Aliko Dangote, a Nigerian tycoon and Africa’s richest man, who has built a massive refinery complex outside Lagos and plans to expand across the continent. Last year local investors accounted for 45% of venture-capital commitments in Africa, the highest-ever share. New rules in many places mean that some of the $1trn-plus on the balance-sheets of pension, insurance and sovereign-wealth funds will go to private equity and infrastructure, not just bills and bonds.

Africa still faces huge challenges. The flipside of its demographic boom is that 15m young people will soon be entering the labour market every year, most of them without hope of a formal job. Electricity remains patchy and costly. Agricultural productivity, while improving, lags behind global averages. The share of children in primary school has stalled since 2010. Complacent African politicians are often reluctant to allow the rise of large businesses that owe their success to entrepreneurship, rather than political connections. Too many corrupt autocracies opt to repress restless populations rather than uplift them.

Even so, it is time for the world to update how it thinks about Africa. The Middle East is at war again, Europe is sluggish and America is run by its own would-be autocrat. As a result, the continent is starting to seem less and less risky. Relatively speaking, Africa looks a safer bet than ever. ■