Where Next? - Future Investment Destinations in Africa
Preparing for the festive season, we take stock of the achievements in 2023 and set goals and forecasts for the year ahead. To address one of the most common questions we are being asked, “Where next?”, below we are taking a look at some of the promising investment destinations in Africa.
Morocco
In 2022, net foreign direct investment (FDI) inflows in Morocco reached $2.1 billion, an increase of 7% over the previous year. The United States has overtaken France as the largest foreign investor in the country – accounting for 34% of total foreign direct investment inflows. Morocco’s manufacturing sector accounted for $1 billion of the total FDI inflows in the country, with the automotive industry leading the field.
One of the reasons contributing to increased investor confidence is several reforms introduced in Morocco aimed at further improving the investment climate in the country. For example, the new Finance Law introduced key tax measures, including a phased reform of corporate income tax rates and implemented tax-related incentives. Another example is the Investment Charter, that recognizes investments (both foreign and domestic) as the key driving force behind Morocco’s economic growth. It establishes a framework with incentives and an investment environment as the centerpiece of such growth.
Egypt
Egypt is one of the most populous countries on the African continent – the population is projected to reach 120 million people by 2030, a nearly 20% increase compared to 2020. That means not only an attractive domestic market but also a large labour force to tap into, at a fraction of the cost in Eastern Europe or nearby Turkey, for example.
In a sign of growing investor confidence (despite being in a sensitive geopolitical region), FDIt inflows in Egypt increased by 10% in 2023, reaching $10 billion. The services sector accounted for nearly 60% of that, as outsourcing revenue exports reached $4.5 billion. Egypt aims to double that and create more than 200,000 new jobs by 2026. The country has signed a range of free-trade agreements (US, EU, South America and some African countries) making it an attractive export base. The manufacturing sector alone attracted $3.3 billion of foreign investment in 2023. For example, the country is already the third largest automotive manufacturing market in the region, only behind South Africa and Morocco.
Besides a large talent pool and low costs, the government continues its efforts to create an attractive business environment for foreign investors in the country. New amendments introduced to the Investment Law in mid-2023 introduced further tax and cash incentives programmes.
Tunisia
Comparatively smaller to its regional neighbours in terms of population and economic potential, Tunisia has also developed a comprehensive grants and incentives framework and continues to attract foreign investors. Automotive and ICT/BPO sectors are among the priority ones. The country already exports $ 2.4 billion annually in automotive components and it aims to double that by 2027 and to create additional 150,000 jobs. On the services sector side, the availability of a young educated workforce makes it a preferred location of choice when it comes to multi-lingual (accent-neutral) customer service support.
Foreign investors are eligible to benefit from a range of government support measures, such as cash grants, tax deductions, infrastructure development contributions, training grants, etc. Projects of strategic importance and national interest ($15 million investment and 500 new jobs created over three years) qualify for a more attractive benefits package.
Contact Hickey to learn more and to begin exploring how we can support you in Africa and around the world!
