Conflicts in the Ivory Coast and Sudan's troubled Darfur region are driving potential investors out of Africa, the United Nations says.
Businesses in Ivory Coast have suffered from renewed tensions
Instability there was having a "ripple effect" across Africa said Anne Miroux, head of investment analysis for the UN Conference on Trade and Development.
"People associate what is happening in Sudan with what is happening in peaceful countries," she said.
Ms Miroux was speaking at a conference in Ethiopia on investment in Africa.
In Darfur in western Sudan, more than 1.5 million people have fled their homes and some 70,000 people have been killed.
Pro-government Arab militias are accused of ethnic cleansing and even genocide against the region's black African population.
Ivory Coast's civil war was reignited earlier this month, when Ivorian forces attacked rebels after a two-year stand-off.
The situation in Ivory Coast was "terrible for foreign investment because this country was once a pearl," Ms Miroux said at the conference in Addis Ababa.
Africa has the lowest level of foreign investment of any continent at $15bn a year - compared with $53bn alone for China in 2003, Unctad said.
Angola, Equatorial Guinea, Morocco, Nigeria and Sudan attract the largest amount of foreign investment, mainly due to their oil reserves.
However, Razia Khan, chief Africa economist with Standard Chartered bank, said that while political developments could harm Africa's reputation, the outlook for investors remained good.
"The focus tends to be on countries identified as troublesome, but in Africa as a whole, the climate has improved and people are willing to invest, " she told BBC News.
Inflation rates for the continent in 2004 are expected to be in single digits for the third year running, she said.
Important gains were being made for private sector growth, and investors were generally happy with their returns, she added.