The RMB Where to Invest in Africa 2024 report highlights Africa’s top investment economies

Rand Merchant Bank, the corporate investment banking of First National Bank of Botswana, in collaboration with the Gordon Institute of Business Science (GIBS), has released the highly anticipated 2024 edition of its Where to Invest in Africa report, a comprehensive analysis of the continent’s top investment destinations. 

“Africa is not a country, but a vast, diverse and complex continent with different cultures, economies and investment potential. Our report, therefore, is not a definitive guide, but rather it is designed to provide insight to uncover the underlying drivers of a country’s performance that inform its ranking. This offers invaluable insights for investors, policymakers, and business leaders looking to navigate Africa’s dynamic economic landscape,” says  Mr Gomolemo Basele,  Economist at First National Bank of Botswana.

Expanded data, extended granularity

Investment decisions need to be viewed through the lenses of both economic performance and operating environment. As a result, the robust methodology used for this edition of the Where to Invest in Africa report builds and expands on previous editions, leveraging new data sets as well as adapting to changing geopolitical and macroeconomic climates. 

The report takes into account various factors proven to determine a country’s progress and therefore its investment potential. The scorecard for 2024 highlights 31 countries that collectively represent 92% of the continent’s economic activity and three quarters of its population. It draws on publicly available data sets from global institutions, including the World Bank, the IMF, the African Development Bank, the United Nations, and the International Labour Organisation. 

The model is constructed from 20 metrics across four measurement pillars: economic performance and potential; market accessibility and innovation; economic stability and investment climate; and social and human development. Each metric is weighted, which translates into a weight for each pillar, and based on these metrics, a standardised scorecard is produced with rankings that enable effective comparison across Africa’s complex and heterogeneous environment. 

Africa’s top five investment destinations

Combining these elements results in a ranking across the 31 countries measured. The results show that the two small island economies of Seychelles and Mauritius rank first and second as the most attractive investment destinations on the continent, while the significantly larger economies of Egypt, South Africa, and Morocco rank in third, fourth and fifth places, respectively. 

Seychelles leads the rankings thanks to high levels of personal freedom, human development, and a stable economic environment. Seychelles offers a unique and attractive investment climate. Despite scoring lower on economic size and potential, second-placed Mauritius is known for innovation, economic freedom, and high GDP per capita. It continues to be a top destination for investors seeking stability and growth opportunities in a well-regulated environment. 

Egypt, in third place overall, represents Africa’s largest economy by GDP (2023), offering a substantial market with diverse opportunities in sectors like technology, manufacturing, and services. Its strategic location and economic complexity further enhance its attractiveness. Despite facing significant challenges, South Africa remains a crucial hub for investment in Africa and ranks fourth. Its robust financial sector, diverse economy, and potential for infrastructure development make it a key player. Finally, Morocco’s strong performance in connectedness, innovation, and economic stability positions it as a top investment destination, placing fifth. Its strategic proximity to European markets adds to its appeal.

A strong base is an opportunity for Botswana to address some obvious challenges

Botswana ranks 14 out of the 31 countries analysed in the report, topping the list for political stability, but bottoming out when it comes to the import sector – heavily reliant on South Africa for key imports like electricity and petroleum. Investors would be well positioned to monitor Botswana’s capacity to limit this reliance and diversify its export basket beyond diamonds, ideally to products with greater complexity. A tradition of free elections and political cohesion as well as a high GDP per capita are attractive prospects for investors, but this is mediated by high inequality and unemployment rates.