Top 10 Africa investment destinations: Report

For 2022 and 2023, geopolitical distress, currency volatility, and inflation rendered the African investment scene more indeterminate and fragile.

The World Bank reported in October that not only did the two dominant African oil producers - Nigeria and Angola - fall significantly in currency ratings but in the same period, other countries on the continent experienced similar depressive notes.

Notably, South Africa, Egypt and Nigeria’s economies account for 70% of Africa’s total GDP so as a result of these three countries struggling, Africa’s real GDP growth will slow to 2.5% in 2023 from 3.7% in 2022, Ernst & Young reports. Coups and other political changes muddied the investment scene. However, there remains an attractive report for FDI on the continent.

Here’s a look at the top 10 investment destinations according to Ernst & Young's Africa Attractiveness report dated November 2023.

1. South Africa’s slow growth yet promising investments

South Africa, despite being the slowest-growing major African economy, attracted the most FDI projects in 2022. The US, UK, and the UAE dominated investments, with notable projects like a $20 billion sustainable city and a $10 billion investment in renewables by ACWA Power. In other sectors, the impact of the FDI extended beyond financial figures, as South Africa's FDI initiatives contributed significantly to job creation, generating approximately 15,000 employment opportunities. This milestone surpassed other regions by a considerable margin, highlighting the tangible socio-economic benefits of the surge in foreign investment. Overall, South Africa’s FDI was valued at up to $26.8b.

1. Zimbabwe’s rebound from economic challenges

Zimbabwe, breaking into the top 10 for the first time, saw a surge in FDI with projects like the $500 million Zim Cyber City and a $2.83 billion battery metals park approved by the government, China’s Sinomine Resource Group’s $200m project. China and the UK led investments, focusing on metals and renewables. Zimbabwe received 14 projects worth $5.2b which created at least 5000 jobs. While investments declined in 2020 as a result of COVID-19, Zimbabwe picked up in 2021 and 2022.

1. Egypt’s booming investment scene

Despite economic challenges, Egypt emerged as a key FDI hub, experiencing a 187% increase in investments in 2022. The UAE led with $27.4 billion in FDI, contributing to projects like a $13 billion green hydrogen plant led by India-based ACME Group and a 10GW wind farm attracting more than $10b in investments. These showcase Egypt's commitment to economic reform. “Egypt’s ability to build longevity in its investment inflows will be determined by its commitment to economic reform. Recently, the authorities have moved toward a floating currency, which had previously put a break on investor appetite. It is also privatizing many of its state-owned entities, with $1.9b of sales to the private sector lined up,” Egypt’s Prime Minister, Mostafa Madbouly is quoted in the report.

1. Morocco’s green energy potential

Morocco, the second-largest FDI destination in North Africa, attracted $15.3 billion in capital investment in 2022. Notable projects included a $10 billion investment in a hydrogen and green ammonia project. Investment Monitor’s 2022 Inward FDI Performance Index reported that Morocco ranked first for FDI in Africa and third in the Middle East and North Africa region. France, the US, and the UAE were major contributors to Morocco's FDI success. “Total Eren, a subsidiary of Luxembourg-based renewable energy company EREN Groupe, will invest MAD100b (approximately $10b) in a hydrogen and green ammonia project, French telecom company Orange will invest $576m in Morocco over the next three years, UK-based Xlinks will build 10.5GW wind and solar plants,” the report states.

1. Kenya’s East Africa's FDI powerhouse

Kenya led East Africa in FDI with a 117% year-on-year increase in 2022, attracting $2 billion in capital investment. The US took the lead in investments with 14 projects valued at $748m, and significant projects included Moderna's $500 million investment in vaccine production and a €112 million contribution from the German government for renewable energy projects. Generally, Kenya received 63 projects, with a capital of $2b. Other significant investors are Nigeria, Mauritius, South Africa and Egypt. In terms of jobs, these FDIs created at least 3700 jobs in Kenya.

1. Tanzania reaching pre-COVID levels

Tanzania experienced a 133% year-on-year increase in investment in 2022, reaching pre-COVID levels. The Ernst & Young analysis stated Tanzania attracted “21 projects worth $1.3b and creating 4,566 jobs.” “The projects included, Burundi-based Intracom is planning a $250m integrated cement plant in the Kigoma region, Kenya Electricity Generating Company (KenGen) is looking at two geothermal drilling projects in Tanzania, Tanzania will sign key agreements with oil majors including Equinor ASA and Shell Plc for a planned $40b LNG export project,” the report adds.

1. Nigeria’s diverse sectors drive FDI

Nigeria received 49 FDI projects in 2022, valued at $2 billion, with a focus on services, technology, and financial services. India and China led in capital flows, with Bharti Airtel committing to a $700 million annual investment and a $10 billion agreement with Sun Africa LLC for power supply. Again, the government and the French Development Agency (Agence Française de Développement) signed a grant agreement of €25m for the Northern Corridor Transport Project. These investments reportedly created 3,328 jobs for the Nigerian people.

1. Ghana’s FDI on the Rise

Despite remaining below pre-COVID levels, Ghana saw a 35% increase in FDI in 2022. Ghana received 35 investment projects last year worth  $1.3bn and created at least 2500 jobs in the country.  Notable projects included a drone delivery firm's expansion and the Ewoyaa lithium project with a capital cost estimate of $125 million.

1. Cote d'Ivoire’s French influence and diverse investments

Cote d'Ivoire attracted FDI with 14 projects in 2022, driven by French influence. Investments in CleanTech, food and beverages, and a 50MW solar PV project with UAE-based AMEA Power highlighted the country's diverse economic interests. The region also saw an uptick in investment in both the CleanTech and food and beverages sectors. Côte d’Ivoire and Senegal were the major FDI beneficiaries in the French-speaking sub-Saharan Africa (FSSA) region.

1. Senegal’s doubled FDI and strategic investments

Senegal more than doubled its FDI with 14 projects worth $1.4 billion in 2022. Business services attracted the most investments, with key projects including Endeavour Mining's $290 million joint venture and ACWA Power's agreements for a seawater reverse osmosis plant and a gas turbine plant.