While South Africa and Nigeria are relatively well-known large markets for international investment in Africa, Euromonitor says that Kenya, Ethiopia, Ghana, Tanzania and Cameroon have relatively strong economies, large populations and good growth prospects – although there are still skills and infrastructure challenges in many parts of these countries.
Writing on the Euromonitor blog, country insight managing editor Media Eghbal said: “Strong economic growth, young populations, a swelling middle class and untapped consumer spending potential are making Sub-Saharan Africa a key investment opportunity.”
Several of these countries have ambitious goals to improve their economies over the coming couple of decades. The Kenyan government, for example, has a Vision 2030 plan, under which it aims to become a middle-income newly industrialised country by 2030, and Cameroon plans to become an upper middle-income country by 2035.
Ethiopia has the second largest population in the region after Nigeria, and the fastest average annual real GDP growth in Sub-Saharan Africa from 2007 to 2012, at 8.7%, albeit from a low base.
Meanwhile, Euromonitor said that Tanzania’s agricultural-based economy is “performing below potential”.
In addition, Eghbal pointed to strong export ties with Europe as a potential risk to African economies as the European market continues to struggle. More than half (57.4%) of Ghana’s exports went to Europe last year, while 46% of Cameroon’s exports were destined for Europe.
“Despite risks, these frontier markets will offer attractive long-term investment potential as their economies develop from a low base, outperforming many stagnant, crisis-hit advanced economies,” Eghbal wrote.