Africa in the global economy: development challenges and investment opportunities for Europe

Abstract Africa is increasingly viewed as a pivotal driver of global economic growth, offering both significant opportunities and complex challenges for international investors. Yet the continent remains structurally marginalized within global investment flows. This article investigates the developmental impact of foreign direct investment (FDI) in Africa, focusing particularly on Europe’s role relative to other major global actors. It argues that the predominance of extractive and service-oriented capital inflows has deepened external dependency, weakened domestic value chains, and contributed to premature deindustrialization across parts of the continent. Africa’s continued difficulty in attracting manufacturing-oriented FDI—relative to peer emerging economies—constitutes a critical constraint on its economic growth and deeper integration into the global economy. The article contends that more diversified investment, anchored in manufacturing and supported by policies that enhance absorptive capacity and innovation ecosystems, provides the most viable pathway toward productivity gains, employment creation, and structural transformation. Against this backdrop, the study examines the strategies of international investors engaged in the contemporary ‘new scramble for Africa.’ It underscores Europe’s enduring structural advantages—geographic proximity, historical and institutional ties, and a substantial cumulative investment base—while analyzing how these strengths are increasingly undermined by political fragmentation, colonial legacies, and diminishing influence amid intensifying global competition. The article explores the policy implications of this shifting landscape, arguing that Europe’s future relevance depends on consolidating a more unified and genuinely federal framework, and on recalibrating its engagement with Africa toward mutual benefit, collaborative industrialization, and sustainable co-evolution within a multipolar global order shaped by Africa’s growing strategic agency.