Global foreign direct investment rose 6 percent to $1.6 trillion in 2025, reversing a three-year decline, but the recovery masks a fundamental shift in how capital is allocated, the UN Conference on Trade and Development reported on Tuesday. Investment became more selective, concentrating in fewer host economies and in capital- and technology-intensive sectors, creating a landscape of winners and losers as governments compete for high-value industries rather than traditional manufacturing.

Kenya attracted an estimated $3.2 billion in FDI, a 37.7 percent jump that marked its strongest performance on record. The country generated more than half of East Africa’s additional foreign investment, lifting its regional market share to 21.9 percent, the highest in six years. UNCTAD attributes the surge to policy reforms—including corporate tax cuts and dividend exemptions for firms accredited under the Nairobi International Financial Centre—and to a renewable-heavy electricity system that gives Kenya a cost and credibility advantage in attracting digital infrastructure investment. A $1 billion package anchored by a geothermal-powered data centre exemplifies the trend.

The United Arab Emirates recorded its fourth consecutive year of record inflows, reaching Dh177.3 billion ($48.3 billion), a 6 percent increase that lifted the country to ninth place globally among FDI destinations. Greenfield projects dominated, with 1,562 announcements and capital expenditure of $34.1 billion, equivalent to 1.8 percent of the global total. Manufacturing led with a 30 percent share, followed by communications at 29 percent, driven by the Stargate UAE AI compute cluster. Gulf officials note that the composition of inflows is maturing: mergers and acquisitions rose to 8 percent of the total, reinvestment to 11.2 percent, and average startup deal size nearly doubled to $9.2 million, signalling a shift from early-stage formation to expansion.

Viewed from East Africa, Kenya’s performance outpaced neighbours Uganda, Tanzania and Ethiopia, where inflows grew modestly or declined. In West Asia, the UAE accounted for 40 percent of the region’s fixed capital formation, while Saudi Arabia’s inflows rose 53 percent and Qatar’s surged from a low base. The next milestone to watch is the implementation of national investment strategies: the UAE aims to lift annual FDI inflows to $65 billion and stock to $600 billion by 2031, while Kenya’s ability to sustain momentum will depend on deepening its digital innovation infrastructure and regulatory experimentation.