Foreign investors return to African markets as reforms boost confidence

Foreign investors are re-entering African markets as governments implement fiscal and currency reforms that have begun to restore confidence, Standard Chartered’s Africa team says. Reforms in Nigeria, Ghana, Egypt and Zambia, along with targeted support from export credit agencies and development finance institutions, have helped unlock capital from Gulf investors, hedge funds, asset managers and development financiers. Projects such as the UK Export Finance-backed refurbishment of Tin Can Island Port in Lagos — a package valued at approximately $1 billion — illustrate growing investor readiness to fund large transactions.

“The financial challenges after the COVID-19 pandemic were quite deep, and hence there was a risk-off mindset,” said Dalu Ajene, Chief Executive and Head of Coverage for Africa at Standard Chartered. “It’s now attracting both concessionary funding, but also real money investors to be able to now look at Africa in a much more serious way than they otherwise would have three years ago when a lot of African balance sheets were in a mess.”

Ajene highlighted several drivers of the renewed interest. Nigeria’s removal of its long-running petrol subsidy and foreign exchange reforms, Ghana and Zambia’s debt restructuring efforts, and Egypt’s receipt of major international support packages have all helped stabilise markets and reopen sovereign debt channels that were effectively shut during the pandemic and the period of elevated global interest rates.

• Development finance institutions and export credit agencies have played a bridging role, supporting projects and crowding in private capital. Ajene cited the Tin Can Island Port refurbishment — backed by United Kingdom Export Finance — as an example of such facilitation.
• Hedge funds and asset managers are increasingly active in selected sovereign debt markets, particularly in Egypt, Nigeria, Zambia, Uganda and Ghana, where opportunities for returns have re-emerged as perceived risk recedes.
• Gulf interest is rising, supported by expanding economic ties with the United Arab Emirates. Several African governments, including Nigeria, Kenya, Morocco and Mauritius, have signed or are pursuing comprehensive economic partnership agreements with the UAE aimed at boosting trade and investment.

Ajene argued these cooperation frameworks can unlock larger transactions: “Once you have the cooperation frameworks, then you can now start seeing the kind of chunky investments that matter.” He added that such deals could help overcome a historical tendency for projects to struggle to exceed $100 million.

On financing instruments, Ajene defended the use of total return swaps (TRS) by governments such as Angola, Nigeria and Senegal. Critics, including the IMF and transparency advocates, have warned TRS can obscure the full extent of liabilities. “It’s actually unfair to say they’re not transparent, and I think it’s also unfair to classify them as more or less risky,” Ajene said. Standard Chartered confirmed it participates in TRS transactions but declined to discuss specific deals due to client confidentiality.

Outlook: while reforms and renewed financing interest have reopened capital flows, sustaining momentum will depend on governments maintaining reforms, managing debt vulnerabilities and preserving macroeconomic stability. Investors and development financiers remain active, but high borrowing costs and public finance pressures mean progress remains contingent on continued policy credibility and careful debt management.