East Africa’s appeal to investors is underpinned by several key factors:
š Robust Economic Growth and Political Stability
According to the African Development Bank, East Africa was the fastest-growing region on the continent in 2019, with a growth rate of 5.0%. This impressive expansion is driven by robust public and private investment, a growing consumer class, and financial sector reforms that boost overall economic stability. The International Monetary Fund (IMF) predicts that East Africa will continue to outperform other African regions in the coming years, ensuring continued attractiveness for investors and entrepreneurs.
Political stability further enhances the region’s investment climate. Countries such as Rwanda and Tanzania have maintained relative political stability and have made strides in improving governance, reducing corruption, and fostering a conducive business environment. These efforts provide investors with increased confidence in the regionās long-term investment prospects.
š Strategic Location and Market Access
East Africa’s strategic location, with access to the Indian Ocean and major trade routes, offers distinct advantages for businesses and investors. This favorable geographical position enables companies to benefit from a vast potential market, including access to the Middle East, Asia, and Europe. The region has also taken steps to enhance regional integration and market access through the East African Community (EAC), a regional intergovernmental organization that promotes trade and investment across Kenya, Tanzania, Uganda, Rwanda, Burundi, and South Sudan. The EACās focus on eliminating trade barriers and fostering a customs union presents attractive opportunities for businesses to expand within the region.
šļø Infrastructure Development
East Africa’s commitment to infrastructure development stands out compared to its counterparts in other African regions. Governments in the region have prioritized major infrastructure projects such as roads, railways, ports, and telecommunications networks to improve connectivity and foster economic growth. For instance, the Lamu Port-South Sudan-Ethiopia Transport (LAPSSET) Corridor project is a flagship initiative aimed at boosting regional integration, trade, and investment. Additionally, investments in renewable energy projects, such as the Lake Turkana Wind Power Project in Kenya and the Grand Ethiopian Renaissance Dam, add to the regionās competitive edge by addressing power needs and promoting sustainable development.
š” Innovation and Skilled Workforce
East Africa has demonstrated remarkable achievements in the area of innovation and technology, particularly in the digital and fintech spaces. Kenya, often dubbed āSilicon Savannah,ā has been a pioneer in mobile money technology with its globally recognized M-Pesa platform, while neighboring countries such as Rwanda and Uganda are developing their technology hubs and innovation ecosystems. Furthermore, East Africa possesses a young and increasingly skilled workforce, supported by governments and international organizations investing in education and vocational training. As an example, the African Institute for Mathematical Sciences (AIMS) in Rwanda aims to create a pool of highly skilled talent in mathematical sciences to contribute to the regionās development. Access to this skilled workforce can provide investors with the human capital necessary to drive business success in various industries, adding to East Africaās competitive advantage
š± Impact Investing: Driving Positive Change
Impact investingāallocating capital to generate both financial returns and measurable social or environmental benefitsāis gaining significant traction in East Africa. The region is developing an organic approach to impact investing, with the private sector expected to play a positive role in society. This has led to a growing awareness that such investments can play an essential part in tackling the social and economic challenges in the region.
According to Pitchbook data, there are currently 316 impact investors spread through East Africa with 349 deals, 316 investors, 4 exits, and investments in over 94 companies. The largest deal being a joint venture investment by BTG Pactual, Helios Investment Partners, and Petrobras worth USD 1.57 Billion.
Kenya remains the primary focus of impact investing in the region, possessing the largest concentration of impact investors and the most impact capital disbursed. At least 136 impact capital vehicles are active in Kenya, excluding Development Finance Institutions (DFIs), managed by some 95 impact investors with at least USD 240 million committed specifically to investments.
š¤ Partnering with Ormi Investment Consulting Ltd
At Ormi Investment Consulting Ltd, we specialize in guiding investors through East Africa’s dynamic investment landscape.