Most foreign investors have taken interest in investing in Africa as the “final frontier” leaving other emerging markets like China and India as they continue to grow.
Africa with a population of about a billion people (young and old inclusive) and with the presence of significant natural resources, the African continent has been growing in favour among investors over the past decades. However, other regions or countries in Africa has been devasted by war and regime changes keeping many multinational companies and investors away.
As compared to Europe or South America, investing in Africa clearly varies by region. For instance, Northern Africa is very similar to much of the Middle East in terms of its oil assets and major industries. South Africa on the other hand is considered as a more developed market with healthy mining industry. Sub-Saharan Africa is considered as still widely unavailable to international investors and includes lesser developed economies.
Just to mention, Northern Africa encircles countries like Algeria, Egypt, Libya, Mauritania, Morocco, Tunisia, and Western Sahara. Quite some number of these countries are known for their substantial quantity of crude oil reserves.
Taking for example, Libya is recored to hold Africa’s largest oil reserves and seen as the 8th largest reserves in the world. Over ten percent of entire crude oil imported into Europe comes from Libya. Multinational companies have stakes in many of these oil reserves, although politics frequently interferes with operations.
Egypt has an enormous market and a sophisticated business sector, which makes it the most attractive investment destination in Africa, compared to other countries.
Egypt has improved the business environment, which is facilitated through government programs and a progressive increase in investment from the private sector. This has enhanced its economic growth and assisted in repositioning the country on the global investment map.
Since the Arab Spring, the country’s greatly enhanced operating environment has served the country well with an expected growth rate of 4% over the medium term.
Morocco joining the Economic Community of West African States (ECOWAS) and rejoining African Union has enhanced its investment appeal.
3. South Africa
South Africa is recognized as the most popular country to invest in Africa. The region’s level of financial inclusion and financial markets still remains above the rest as many countries face liquidity constraints.
They are driven largely by raw materials and mining, the region is the largest producer of gold, platinum, and chromium in the world. However, the country’s agricultural and banking sectors are also fairly sizable, and its consumer class is slowly reducing reliance on exports and fueling domestic services growth.
Kenya’s favourable weather and political reconciliation after 2017 disputed elections, has propelled the country to one spot higher from the last report with the country’s expected growth rate at above 5%.
Kenya’s economy benefits from a sustained expansion in consumer demand, urbanization, East Africa Community (EAC) integration and investments in infrastructure which includes an oil pipeline, ports, power generation and railways.
The country has the second-best business environment in Africa. Rwanda has more than doubled its business environment in less than a decade according to the World Bank’s operating environment scoring.
Increase in Foreign Domestic Investments (FDI) and the government’s heavy investment in its domestic industries has pushed Rwanda into being one of the fastest-growing economies in the region.
Ghana’s growth outlook is strong and concentrated around the oil and gas sector. Pro-business reforms and improvement in a power supply is going to promote the Non-oil growth in the country.
Despite the deterioration in its operating environment ranking, Ghana remains one of the easier business environment in the continent. There are alot of avenue to invest in Ghana.
7. Côte d’Ivoire
A stable political environment and the government pro-business reforms support Côte d’Ivoire’s strong growth rates. It has large infrastructure especially in transport, which is financed by foreign investment, the government and aid flow. This has supported the country’s strong position.
Nigeria has improved macroeconomics, which is supported by recovering oil prices and production. It has the largest economy in Africa in nominal terms and the largest population, therefore, its domestic demand continues to rise.
Nigeria is attracting strong FDI due to its favourable demographics and resources. Commodity prices have recovered since its liquidity subsided in 2017. However, the political issues remains a factor that make investors to deliberate.
It has the fastest growing economy on the continent. The country has a population of almost 100 million people therefore, there is a significant demand for goods and services. Ethiopia’s prohibition of foreign ownership in key sectors is still a constraint for investment though it is slowly changing.
Tunisia has a favourable operating environment and a reasonable market size making it appear in the top ten list. The government has implemented a new simplified investment code, which is encouraging foreign investment in the country and attracted multinational manufacturers.