Africa faces the risk of capital flight as a result of increased cases of unconstitutional government changes, which are creating macroeconomic uncertainties among foreign investors, African Export-Import Bank (Afreximbank) has warned.

The pan-African multilateral lender says coups, ongoing conflicts, political instability and rising insecurity in several parts of the continent continue to weigh heavily on the continent’s investment and economic outlook, adding that the heightened political uncertainty around electoral cycles may further delay reforms, weaken investor confidence and elevate risk premiums.

Capital flight is the rapid, large-scale outflow of assets and money from a country, typically driven by economic instability, political turmoil, currency devaluation, or fear of capital controls.

The lender, in its latest report titled African Trade and Economic Outlook 2026, says: “While Africa contributes little to global uncertainty, numerous domestic socioeconomic and political events generate significant uncertainty within the continent. In some parts of Africa, particularly the West African and Sahel sub-regions, recent surges in unconstitutional government changes have been major drivers.”“For example, coups d’état, which occurred in Mali (2020 and 2021), Guinea (2021), Sudan (2021), Burkina Faso (2022), Niger (2023) and Madagascar (2025), have aggravated security crises, leading to the suspension of international aid and triggering withdrawal of several multinational firms,” it adds.

The Cairo-based lender says the decline of democratic governance on the continent disrupts long-term economic planning and policy continuity, thereby increasing macroeconomic uncertainty.“Ongoing conflict, political instability, and rising insecurity in several parts of the continent continue to weigh on the outlook. These conditions disrupt production, fragment internal markets, and undermine regional trade corridors, while also necessitating higher security-related spending that reduces fiscal space for development and trade-enabling investments,” states report.

According to Afreximbank, heightened political uncertainty around electoral cycles may further delay reforms, weaken investor confidence and elevate risk premiums.

Africa recorded the steepest drop in foreign direct investment (FDI) during the first half of 2025 as economic headwinds and investor uncertainty disrupted global capital flows across multiple sectors, according to the United Nations Conference on Trade and Development.

FDI inflows to the continent fell by 42 percent to $28 billion in the six months to June 2025, from $48 billion during a similar period a year earlier, the sharpest regional decline amid a modest global slowdown.

Afreximbank says Africa’s economic landscape is challenged by spillovers from these occurrences and domestic economic conditions, which reduce trading activities and undermine macroeconomic stability.“The persistent escalation of geopolitical tensions and rising global economic uncertainty continues to weigh on investor confidence, trade, and global supply chains. These cumulative global and regional uncertainties are expected to continue weighing on investment, public revenues, and macroeconomic stability across the continent in 2026,” the lender says, warning that this could trigger investor panic and credit rating downgrades by international agencies as lingering fiscal challenges further tighten financial conditions.

With more than 50 percent of GDP in debt, public debt in Africa remains high and many countries have adopted strategic stabilisation policies to manage their debts while steering them toward growth.

Africa’s heavy reliance on commodity exports further heightens its exposure and fiscal sensitivity to the effects of price shocks. As global uncertainty increases, prices and export proceeds from oil, minerals and agricultural products tend to drop sharply.

The report notes that Africa’s real GDP growth outlook will be shaped by the interaction between external spillovers and domestic socioeconomic and political conditions.

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