The opportunities for doing business in Africa are significant and diverse. According to the Global Africa Business Initiative, the African continent has a $2.5 trillion market opportunity.
Africa is currently witnessing an influx of innovations, ideas, and revenue, making it a profitable region for both local and foreign investors. Different economic sectors, from agriculture and banking to finance and manufacturing, are on a growth trajectory.
Individual countries are working hard to change economic realities and make it easy for foreign investors to do business in Africa. A report released by African Development Bank in 2020 shows that Africa had an economic growth of 3.4% in 2019.
The continent’s economic growth rate is projected at about 3.9% in 2022. Also, economists predict that the African continent will experience constant and stable economic growth in the foreseeable future.
Agriculture is the biggest economic sector in Africa, representing 15% of its GDP. Other rapidly growing sectors are oil and gas, telecommunications, banking, and infrastructure.
The financial services market could reach $230 billion in revenue by 2025. Overall, the African continent is positioned to become one of the important drivers of the global business economy.
What is the most profitable business in Africa?
It is worth noting that the country is home to a majority of the top global companies operating in Africa. The South African government has created a favorable environment for local and global businesses operating in the country.
For instance, the government has invested heavily in the transport sector and the provision of reliable power and internet connectivity, which are vital for doing business.
Besides, South Africa blends first-world infrastructure with a reasonable cost of investment, making it an attractive destination for starting a business in Africa.
What is the fastest-growing business in Africa?
According to Financial Times’ 2022 ranking, Wasoko is the fastest-growing business in Africa. The Kenyan-based technology company, which was founded in 2016, specializes in delivering goods to traders conveniently and cheaply.
Wasoko’s total revenue in 2017 was $0.309 million. In 2020, the company grew its revenues to $27.447 million. This translates to a revenue growth rate of 8700% in just three years.
The improved internet connectivity and business registration procedures in Kenya have influenced the rapid growth of Wasoko over the past six years.
10 Easiest countries to do business in Africa
Rand Merchant Bank (RMB), a leading investment and corporate bank in Africa, assessed Africa’s investment potential in 2021. The key parameters of the assessment were development plans, fiscal scores, and operating environments.
As African economies strive to fight COVID-19, RMB considered these three parameters as crucial to investment attractiveness. Furthermore, the Bank argues that these factors were central to resuscitating economic development while fighting the pandemic.
Below is a list of the 10 African countries with the friendliest business environment, according to the RMB report.
Over the past few years, the Tanzanian government has made a consistent investment in key sectors such as finance, telecommunication, and agriculture. These efforts have placed Tanzania on a development trajectory.
Its economy has benefited a lot from its reasonable economic policies and stable political environment. The country’s comprehensive economic reform measures have fostered the thriving of a favorable business environment.
As Tanzania’s economy grows, it will continue to win the confidence of regional and foreign investors who want to start a business in Africa.
Kenya has over the years adopted diverse legislations to ease doing business in the country. The country has made various amendments to business and tax laws to enhance business in Kenya.
The Kenyan government has also improved its business environment by easing construction permit dealings and reducing related charges. Investors can now access building permit requirements online.
The government has made strides to enhance the provision of reliable electricity by modernizing the national grid infrastructure. In 2020, the World Bank recognized that Kenya has eased tax payment processes using an online payment system.
Kenya, which is the biggest economy in East Africa, stands out as a promising environment for doing business in Africa.
8. Cote d’Ivoire
After a decade-long political turmoil, the Cote d’Ivoire government committed to reforming the country’s business environment and making it easier to do business.
The government partnered with the World Bank Group to reduce regulatory barriers. It also implemented new procedures and policies that encouraged the growth of the private sector.
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These reforms have resulted in considerable economic growth over the past decade. Cote d’Ivoire continues to encourage private sector growth and make the country one of the enabling environments for conducting business in Africa.
Investors planning to start a business in Africa can tap into the nation’s increasing investment potential and invest in key sectors such as renewable energy, infrastructure, and agribusiness.
Mauritius is another suitable destination for investors looking to do business in Africa. This island country, which is off the eastern coast of Africa, is among the most developed economies in Africa.
The Mauritius government has consistently improved the business environment in the country, making it favorable to both local and foreign investors. To make Mauritius a leading business destination in Africa, the government has streamlined various business procedures.
As noted in the Ease of Doing Business Report by the World Bank, Mauritius has made significant improvements in property registration and issuance of construction permits.
The government also implemented an electronic registry system that significantly reduced land and property disputes while enhancing the transparency of information given by authorities. Mauritius remains one of the transparent, competitive, and attractive investment hubs in Africa.
The RMB’s 2021 report on the best investment countries in Africa ranked Ghana at position six. Ghana’s investment attractiveness has outperformed many African economies.
The West African country has become an attractive investment destination as a result of several government initiatives. Some areas that Ghana has ranked high include acquiring credit, getting electricity, and protecting minority investors.
In recent years, Ghana has emerged as the most favorable environment for doing business in West Africa. Good governance has offered the country a stronger footing amidst past crises such as COVID-19. Also, its economy has experienced major shifts that have positioned it for economic growth and as a suitable environment for doing business in Africa.
Since gaining independence, Botswana has made significant investments in the construction and infrastructure across the country. Today, the country has world-class roads as well as energy, dams, and ICT installations in both rural and urban areas.
Over the years, legislators have made extensive legal reforms to make Botswana a free market economy. These included the introduction of new customs, tax, and investment laws.
Furthermore, the government has implemented laws that assure investor protection and easy access to the investor market. It has also the decentralized acquisition of trading licenses, allowing investors to obtain licenses from town councils and district commercial departments.
Also, the country has maintained comparatively low taxation levels to motivate investment. Botswana offers various business opportunities to investors considering doing business in Africa. These include energy, agriculture, health, mining, tourism, and financial services.
Rwanda is another viable and profitable option when it comes to doing business in Africa. The east African country may not have as vast human and natural resources as some other African economies.
Nonetheless, it is among the top investment destinations in Africa. The Rwandan government has made it easier and swift to register a business. Acquiring certifications for manufacturing or construction takes just a few days.
The government founded the Rwanda Development Board (RDB) in 2009 to promote, spur, and coordinate economic development in Rwanda. RDB brings together all governmental agencies responsible for attracting, retaining, and facilitating investments in the country.
Rwanda has over the years maintained political stability and rapid economic growth. The country has numerous investment opportunities that the African diaspora and foreigners can exploit.
3. South Africa
If you are planning to do business in Africa, South Africa is a good place to begin. Between 2018 and 2019, the country implemented reforms that have since made it easier for foreign investors to do business.
The government made it easier to enforce contracts and introduced a specialized court to hear related commercial cases. Also, it set a national minimum wage and introduced reforms that made it easy to access electricity and obtain construction approvals.
The government introduced efficient procedures for registering and transferring property, making the whole process less complex and faster. South Africa serves as an efficient and strategic springboard for foreign investors intending to expand into the sub-Saharan markets.
Doing business in Morocco has improved considerably over the past decade. In 2010, the Moroccan government set up a committee that coordinated efforts to enhance the economy. Through this committee, Morocco reformed its regulatory and legal framework for doing business.
In addition, it simplified and digitized documentation procedures concerning imports and exports, construction licenses, and tax exemptions. The implementation of these and other measures brought a turnaround in the business environment.
Again, political stability in Morocco has created a favorable environment for foreign investors hoping to do business in Africa.
RMB ranked Egypt in the first position when it comes to the easiness of doing business in Africa. In recent years, the government has made effort to create a conducive regulatory environment.
Consequently, Egypt now has a more friendly and simpler business environment with stronger protection of property rights. Within a few years, the Egyptian government transformed the country from civil unrest and political struggles into a fast-growing economy.
Egypt is now a leading destination for investment across North Africa with business opportunities in various sectors. The government has invested heavily in infrastructure including upgrading ports, roads, and railways.
Egypt, which once struggled with power blackouts, now exports energy to several countries including Sudan and Cyprus. While all African countries were hit by COVID-19, Egypt seems to have quickly bounced back to a growth path.
While Africa has a lot of business potential, opportunities differ from sector to sector as well as from one country to another. Similarly, successful companies doing business in Africa vary widely in their sector and geographic focus.
However, they have one commonality; they all see Africa’s unmet needs as business opportunities. Do you agree with the RMB ranking
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