1. Rwanda
Rwanda has evolved from its tragic past to become known as the "Singapore of Africa". Through sound governance and a determination to build an outwardly focused economy - Rwanda has attracted foreign investment and fostered innovation in a number of sectors. This includes property development, infrastructure, digital start-ups, eco-tourism, manufacturing, and agri-tech.
The World Bank estimated Rwanda's economy grew at 7.6% in the first three quarters of 2023, despite global challenges and local floods in 2023. This growth was driven by the services sector, domestic demand, and industrial sector rebound. Rwanda maintained fiscal responsibility amidst widening external deficits and currency depreciation. The domestic banking sector has remained stable.
Overall, GDP growth is projected to average 7.2% from 2024–26, supported by the recovery of global tourism, construction projects, and manufacturing.
Risks include global economic disruptions and domestic weather-related shocks. Areas for ongoing focus include the maintenance of fiscal discipline, investment into human capital, and boosting domestic savings.
2. Botswana
Botswana stands out as a beacon of regional political stability that is increasingly taking advantage of its natural resources. Its enduring foundations include strong institutions, low corruption, and a resilient financial sector.
Botswana's remarkable economic trajectory, fueled by robust growth and stability, has transformed it from one of the world's poorest nations into a thriving upper-middle-income country. The discovery of extensive diamond reserves ushered Botswana into a period of rapid economic expansion, with its gross national income (GNI) per capita growing faster than the global average since independence in 1966. This growth was underpinned by prudent macroeconomic management, political stability, and sound institutions.
The wealth generated from diamonds enabled investments in critical infrastructure, human capital, and institutional frameworks. Despite facing challenges associated with its large land area and relatively small population, Botswana made substantial strides in expanding its road network, enhancing access to basic services, achieving universal primary education, and improving healthcare outcomes. These investments were instrumental in driving improvements in living standards and fostering economic growth.
Key priorities for Botswana include fostering a competitive private sector, enhancing productivity among small-medium and micro-enterprises, investing in human capital, strengthening resilience to environmental risks, and sustainably managing natural resources. Ongoing efforts to address governance issues in the public sector will be crucial to improving policy implementation and service delivery.
Botswana is an attractive investment if it can can capitalize on its natural resources, renewable energy potential, and high value products and services. Maximising the opportunities will however necessitate ongoing an investment-friendly stance, accessible business environment, and strategic outreach to global markets.
3. Ghana
Ghana has long been considered a bastion of democracy, stability, and a steady economy. This has historically been underpinned by Ghanaian gold and cocoa, but more recently the focus has been infrastructure development, oil and gas sector, manufacturing industry, and tech start ups.
In recent years, Ghana has grappled with a mixture of of domestic and external challenges, resulting in significant economic headwinds. The depreciation of the currency, rising inflation, and withdrawal of investors has dampened confidence. A recent update from the World Bank's noted the challenges facing Ghana's economic outlook, forecasting a slowdown to around 1.5% in 2023 and 2.8% in 2024. Ghana, is however forecast to recover to a stronger growth path by 2025.
The World Bank notes the importance of sound fiscal and monetary policies to enable macroeconomic stability. This includes focus by the Ghanaian government on: enhancing revenue collection by streamlining tax regimes and revenue administration; balanced expenditure controls to support budget execution; energy sector reform to manage sector shortfalls and fiscal sustainability; financial sector stability by building the reserves necessary for stability and development; FDI inflow being encouraged by improving accessibility, transparency, and the broader (enabling) investment climate.
Ghana will remain an attractive investment destination if it can navigate macroeconomic challenges through structural reforms as well as targeted shorter term steps. Key areas to watch will be efforts to manage fiscal stability, strengthen revenue collection, and policies to support the investment climate.
4. Mauritius
The undeniable natural beauty of Mauritius initially attracts many investors, however it is the favourable tax settings, sound legal framework, and educated workforce that compels investors to stay.
Mauritius is a smaller African nation with a population of around 1.3 million and approximately 1.3 million square kilometers within its Exclusive Economic Zone (EEZ). The Mauritius economy grew around 4.7 percent from 1968 to 2017, achieving middle-income status in less than 50 years. In 2022, Mauritius’ GDP was $12.5 billion and its gross national income per capita amounted to $9.921. In July 2020, the World Bank classified Mauritius as a high-income country.
COVID-19 was a significant shock for Mauritius as is the ongoing Russian war with Ukraine. Despite several challenging years, post pandemic GDP returned to 3.5 percent in 2021 and 8.3 percent in 2022, primarily through the recovering tourism sector. There has also been a strong return of the export market of goods and services with the IMF forecasting the Mauritius economy will grow over 6 % in 2022, unemployment reaching 7.8 percent at the end of 2022, and inflation reaching around 11% in 2022.
For investors, Mauritius offers a diversified economy underpinned by agriculture (sugarcane)that includes manufacturing (primarily textiles), tourism, financial and business services, information technology, seafood processing, real estate, and education. Focus areas for the Mauritius economy include - acting as a gateway for investment into Africa; renewable energy; building modern smart cities/infrastructure; growing the maritime economy; and modernizing public transportation (including specifically the airport and port facilities.
Government policy in Mauritius is pro-trade and has sought to attract foreign direct investment from China and India, as well as the United Kingdom, France, and the United States. Mauritius promotes itself as a safe, stable democracy with a favorable investment climate. Corruption in Mauritius has been low by regional standards, albeit remaining an area worth attention.
5. Kenya
Kenya is a long-standing regional hub for diverse opportunities ranging from agribusiness, infrastructure development and an evolving tech sector. Kenya has become a reliable investment destination and entry point for companies exploring wider African operations.
In 2022, the GDP growth rate slowed to 4.8 percent, after the initially promising 7.5 rate in 2021. This has been primarily through the service sector (such as financial services), tourism, and transport. Macroeconomic policies, including exchange rate flexibility, fiscal consolidation, and tighter monetary policy helped to maintain stability and address debt.
Kenya’s medium-term growth outlook remains strong and is projected to remain at around 5 percent, similar to pre-pandemic levels. Real per capita incomes are expected to grow at approximately 3 percent, with poverty estimated to return to pre-pandemic levels.
There is no denying recent challenges that Kenya has had to navigate including: international financial conditions tightening in advanced economies impacting Kenya’s exchange rate and foreign exchange reserves; food Insecurity caused by droughts that have affected a number of businesses and livelihoods; inflationary pressures and exchange rate stability; inflationary pressures due to commodity price volatility; and the unfortunate reality that fiscal consolidation efforts were interrupted by the pandemic.
Sadly, corruption remains pervasive with Transparency International ranking Kenya 123 out of 180 countries in its 2022 Global Corruption Perception Index – reflecting slow progress over recent years.
Looking forward, reasons for optimism with the Kenyan economy include the government's five-year economic development plan as part of the Economic Transformation Agenda that focuses on agriculture; micro, small and medium enterprises; affordable housing and settlement; universal healthcare; a digital superhighway; and supporting the creative industry as core components of economic growth.
Kenya’s Mombasa Port remains a dominant gateway to the East African market and Kenya’s membership in the East African Community (EAC), the Africa Continental Free Trade Area (AfCFTA), and other regional trade arrangements enables preferential trade access to growing regional markets. Kenya is a well developed logistics hub with aviation connections to Africa, Europe, and Asia.
In 2023, Kenya also announced a number of tax and regulatory reforms aimed at improving Kenya’s investment climate. Reforms aimed to improve its business environment, included the Tax Laws Amendment (2018), Finance Act (2018), which established new procedures and provisions related to taxes and streamlined registration processes for small businesses.
Sectors offering the most opportunities for investors include: financial services, infrastructure, agro-processing, energy, extractive industries, transportation, retail, restaurants, technology, health care, and mobile banking.
Conclusion
Five African countries to consider investing in over coming years include Rwanda, Botswana, Ghana, Mauritius, and Kenya. While this list includes some of the smaller economies in Africa, all offer increasingly diverse investment opportunities within relatively stable geo-political contexts.
Beyond this, all five nations offer logical regional gateways to other parts of the continent with good connections to neighboring countries and wider investment opportunities.
References
Botswana - Game, D. E. D. E. L. (1999). Republic of Botswana.
Ghana - TV, I. (2024). POLICY BRIEF No. 21–IFS’REVIEW OF THE 2024 BUDGET. POLICY.
Rwanda - Rwigema, P. C.(2021). Potrait of developing economy: Rwanda perspective. The Strategic Journal of Business & Change Management, 8(3), 637-680.
Rwanda - Rispoli, F. M., McGrenra, D., & Mbago-Bhunu, S. (2019). Republic of Rwanda Country Strategic Opportunities Programme. International Fund for Agricultural Development. https://webapps. ifad. org/members/eb/126/docs/EB-2019-126-R-13-Rev-1. pdf.
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Last updated: May 2023
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