Ten African countries with the highest investment potential
Africa is regarded as the new business frontier of global trade and investment. This despite numerous challenges such as lack of proper infrastructure and access to capital. In it’s most recent report for 2020, Deloitte and Touche outlines countries with most ideal environment for investment. Herein is a snapshot of most appealing countries:
The modest Indian Ocean island, which is best known for its exquisite white beaches and lush lifestyle, is fast becoming one of the hottest investment destinations and foremost business hubs on the African continent.
Being likened to one of the leading real estate and business hubs in Asia is no small achievement.
The fact that Mauritius is on a mission to make itself more attractive as an investment environment is clear from its progressive and highly favourable tax regime.
Mauritian tax planning advantages include no capital gains tax; no inheritance, wealth or gift tax; a standard 15per cent individual tax rate; and no exchange control.
Corporate tax is set at a rate of 15per cent or lower, while the country also boasts a strong tax treaty network.
Côte d’Ivoire has enjoyed a vibrant, robust, and stable economic growth since 2012, but experienced a slowdown in 2020 owing to the Covid-19 crisis.
Prior to the global shock triggered by the pandemic, Côte D’ivoire had one of the most robust economies in Africa and in the world and had grown at an annual average rate of 8 per cent since 2012.
The country remains Francophone West Africa’s economic hub and exerts significant influence in the region. Côte D’ivoire’s score on the World Bank’s human capital index (0.38) improved slightly in 2020 relative to 2019.
Poverty fell sharply from 46.3 per cent in 2015 to 39.4 per cent in 2020, but this decline was confined to urban areas as rural poverty levels rose by 2.4per cent over the same period.
Kenya is the most strategically located. Because it provides easy access to the huge East African Community and the COMESA regional markets.
Having a combined gross domestic product of about $560 Billion (Sh60.368 trillion), the COMESA constitutes an enormous market for investment. It has the highest rate of return on investment in the world.
Additionally, with a coastline on the Indian Ocean, Kenya offers the most effective outlet to export markets in the African region, the Middle East, Europe, and Asia.
Kenya’s Gross Domestic Product (GDP) keeps improving. According to the financial consultancy firm Deloitte, Kenya had the highest number of mega infrastructure projects in East Africa in 2016, maintaining its lead as the regional powerhouse.
Senegal, of all French-speaking African countries, undoubtedly offers a very welcoming environment for foreign investors and comes with numerous advantages it provides.
Senegal is very politically stable and has competitive production costs, a skilled workforce, advantageous geographic location and no restriction on full ownership of a business by foreign investors.
The country’s attractiveness is visible when looking at the Foreign Direct Investments hosted by Senegal, which are higher than its direct neighbours at $629 million (Sh67.8 billion) in 2018, and the total stock of FDI was $5.3 billion (Sh571.3 billion) or 22.1 per cent of GDP as at the end of 2018).
Rwanda is a small but growing market, with a population of 12.3 million people and a Gross Domestic Product (GDP) of $9.5 billion (Sh1.024 trillion), according to the World Bank.
Rwanda enjoys strong economic growth, averaging over seven percent GDP growth annually over the last two decades.
The Rwandan economy grew more than nine percent in 2019 thanks to strong growth in industry, construction, services and agriculture.
Rwanda enjoys relatively high rankings in the World Bank’s Ease of Doing Business Index, which ranked Rwanda 38th of 190 economies in the 2020 report. Leading sectors include energy, agriculture, trade and hospitality, and financial services.
Rwanda’s economy is overwhelmingly rural and heavily dependent on agriculture.
Strong growth in the services sector, particularly construction and tourism, has contributed to overall economic growth in recent years.
Ethiopia has an averaged a 11 per cent annual GDP growth for the last 14 years. The fastest-growing economy in the world during the same period (World Bank Global Economic Prospects).
The country has been recognized by the World Bank through its “Star Reformer Award” for Ethiopia’s outstanding performance on investment policy reform and promotion.
Ethiopia has also been recognized by UNCTAD for promoting investment in the Sustainable Development Goals.
The Grand Ethiopian Renaissance Dam – the largest hydroelectric power dam in Africa being built on the Nile River - is expected to generate 6,000MW of electricity.
This coupled with Gilgel-Gibe III (1,870MW) and Genale-Dawa III (254MW) and other wind power projects will make Ethiopia a regional powerhouse.
Nigeria is the third top destination for FDI in Africa, behind Egypt and Ethiopia.
The country is among the most promising poles of growth in Africa and attracts numerous investors in the sector of hydrocarbon, energy, buildings.
The total stock of FDI was estimated at $98.6 billion (Sh10.6 trillion) in 2019. Nigeria intends to diversify its economy away from oil by building a competitive manufacturing sector, which should facilitate integration into global value chains and boost productivity.
The recent merging of trade, industry and investment under the ambit of the Federal Ministry of Industry, Trade and Investment reflects Nigeria’s intention to effectively coordinate between these three key areas to improve its trading and investment environment.
Some of the country’s main advantages are a partially privatized economy, an advantageous taxation system, significant natural resources and a low cost of labor.
Since its independence, Morocco has made the choice for political pluralism and economic liberalism, by devoting the right of ownership and freedom of enterprise among the fundamental rights guaranteed by the Constitution.
Since the 1980s, Morocco has adopted a policy of economic and financial openness aimed at strengthening the liberalization of foreign trade, a greater integration of Moroccan economy in world’s economy, and the contribution to the consolidation of the multilateral trading system.
Morocco has simplified the procedures for foreign trade, reduced protection tariffs, eliminates non-tariff measures, improved the business and investment climate, expand and diversify of economic and trade relations and finally, consolidates its contribution to the multilateral trading system.
This openness is illustrated by the signing of various free trade agreements with the main economic partners, particularly the European Union, the United States, the Arab and African countries.
Compared to other countries in Africa, South Africa has attracted higher investments. However, it is relatively unattractive for FDI, despite progress owing to investment potential in infrastructure.
But given it’s huge economy, the country leads the way in terms of FDI amounts inflows into Africa, mainly through SEZ programs.
According to data published in the UNCTAD’s 2020 World Investment Report, FDI inflows decreased by 15.1 per cent in 2019, reaching $4.6 billion (Sh495 billion), compared to a high inflow of $5.4 billion (Sh582 billion) registered in 2018.
The Government intends to attract $100 billion (Sh10.78 trillion) of FDI by 2023. The strong increase in the last few years is mainly due to inter-company financing and equity inflows.
Beijing Automotive Industry holding, BMW, Nissan and Mainstream Renewable Energy have been the largest investors in recent years.
The Government of Tanzania has taken a positive approach towards local and international investments and has shown considerable success in attracting FDI.
Currently, both the laws and regulations permit foreign investments and participation as per agreed conditions.
Tanzania uses the World Trade Organization’s (WTO) Trade-related Investment Measures (TRIMs) to encourage and attract investments in line with national priorities, and the regulatory framework for foreign investments.
Tanzania has adopted a myriad of Trade development instruments namely “Export Processing Zones (EPZs), Investment Code and Rules, Export Development/ Promotion and Export Facilitation”.
EPZs were established by the 2002 EPZ Act and are open to both domestic and foreign investors in particular with emphasis on agribusiness, textiles and electronics sectors.
The country has simplified bureaucracy with one-stop facilitation agency, that is Tanzania Investment Centre.