Structural Weakness Behind Growth

In 2025, Bangladesh led South Asia with a 45% growth rate in FDI, but the absolute amount of $1.8 billion is not only far below what a $500 billion GDP economy should attract, but also lags behind economies like Uganda ($3.4 billion), Ghana and the Democratic Republic of the Congo (each $1.9 billion). This contrast highlights structural changes in global capital flows: resource-driven investment and policy-friendly regions are redrawing the FDI landscape, while Bangladesh remains overly reliant on traditional manufacturing and domestic financing.

The latest *World Investment Report 2026* from UNCTAD indicates that Bangladesh's FDI accounts for only 1.4% of its gross fixed capital formation, meaning over 98% of fixed investment is still supported by domestic funds. At the same time, newly announced greenfield investment projects fell by 22.9% to $1.33 billion, showing that investors are becoming cautious about long-term "start from scratch" commitments.

Why Are African Reformers Outperforming?

The core drivers behind the three African countries surpassing Bangladesh are not accidental, but the result of systematic policy reforms working in synergy with resource endowments.

  • **Ghana**: Since the new government took office in 2025, it abolished multiple taxes, established a state-owned gold purchasing company to stabilize the currency, and passed the *Ghana Investment Promotion Authority Act 2026*, which eliminated minimum capital requirements and simplified registration procedures. Combined with inflation dropping from 21% to 3.4% and foreign exchange reserves increasing to $13.95 billion, the investment environment has greatly improved.
  • **Uganda**: Strengthened the one-stop service of its investment authority, expanded incentives for industrial parks and special economic zones, promoted investment in oil and gas infrastructure, and actively aligned with the policy frameworks of the East African Community and the African Continental Free Trade Area (AfCFTA).
  • **Democratic Republic of the Congo**: Through revising investment laws, opening up the electricity sector, developing special economic zones, and regional integration, it attracted billions of dollars in extractive, infrastructure, and agricultural investments.

These countries have translated resource potential into policy execution. Although Bangladesh has a cost advantage in garment manufacturing, it has failed to unleash FDI potential through legal and institutional innovation like these African nations.

Regional Divergence in the Global FDI Recovery

In 2025, global FDI grew by 6% to $1.6 trillion, ending two consecutive years of decline, but the recovery is "narrow and uneven." Developing Asia still leads with $64.4 billion, while the United States ($277 billion), Singapore ($151 billion), Hong Kong SAR ($117 billion), and China ($105 billion) dominate.

However, the rise of African reformers shows that global capital is no longer focused solely on traditional manufacturing hubs. As multinational corporations reassess supply chain risks, geopolitical uncertainties, high financing costs, and economic fragmentation are driving investors to pay more attention to policy stability and resource availability. Emerging fields such as energy transition, semiconductors, and digital infrastructure have become competitive focal points for countries.

Bangladesh's Dilemma and Potential BreakthroughBangladesh's FDI is fundamentally weak in both quality and quantity: greenfield investment is declining, industries are concentrated in low-value-added links, and there is a lack of large resource-based projects. If it only pursues growth rate increases without addressing the structural defect of being "large but not strong," it may continue to be overtaken by African reforming economies or even new competitors in Southeast Asia in the future.

Policy options include deepening special economic zone reforms, simplifying investment approvals, linking investment promotion with regional mechanisms such as the AfCFTA or the Belt and Road Initiative, while proactively deploying in the fields of energy transition and digital infrastructure. Moreover, continuously improving the ease of doing business and stabilizing exchange rates and inflation are basic conditions for attracting high-quality foreign capital.

Long-term Outlook: The Changing Logic of Capital Flows

Global FDI has entered a new phase of "policy-driven + resource-anchored." The past model centered on cheap labor is giving way to comprehensive institutional appeal. Bangladesh's lesson lies in the fact that even with a huge domestic market and a regional hub location, without supporting reforms, capital will still flow to competitors that are better at leveraging policy tools. The case of the three African countries proves that small economies can also leverage reforms to attract large investments. For global investors, the criterion for judging the next investment hotspot is no longer GDP size, but the speed and depth of institutional reform.