Africa’s 7 Hottest Economies (and How You Can Invest in Each One)

The World Bank says seven African countries will grow GDP at a rate of 7% or more over the next three years.

Here’s a countdown of these cheetah economies and some tips on how to invest in each one.

JSE's fastest-growing companies

The World Bank released its latest Global Economic Prospects report this month, and it suggests sub-Saharan Africa will again be among the fastest-growing regions in the world.

Seven countries, in particular, will lead the pack. According to the World Bank’s forecasts, each of them will grow at a rate of 7% or more over the next three years.

That’s cheetah-like pace.

Growth like that should allow for big reductions in poverty and lots of exciting opportunities for investors.

Here’s a countdown of Africa’s fastest-growing economies plus some tips on how to invest in each one.

Africa’s Fastest-Growing Economies

7. Ethiopia
Average GDP Growth (2014-16): +7.0%

What impresses me most about Ethiopia’s rapid economic growth is the fact that it’s already one of Africa’s largest economies. Its 2012 GDP was measured at $43 billion. Annualized growth of 7% suggests that its economy will add $10 billion to this figure in three years – that’s equivalent to adding the entire GDP of Zimbabwe!

An agricultural powerhouse, Ethiopia is now making big gains in the manufacturing and construction sectors, too. Labor productivity is on the rise. Students are staying in school longer. And family sizes are becoming smaller. All bode well for long-term growth.

How to invest:  Ethiopia isn’t yet home to an official stock exchange, but several firms listed on the Nairobi Securities Exchange in neighboring Kenya are anxious to expand there. Oil marketer KenolKobil has already done so.

UK leather maker, Pittards, which sources many of its hides from Ethiopia, trades on the London Stock Exchange. And Nigeria-listed Dangote Cement plans to open a manufacturing plant there later this year.

6. Tanzania
Average GDP Growth (2014-16): +7.2%

The discovery of vast offshore natural gas reserves is fueling Tanzania’s growth. But this is much more than a natural resource story.

A debt-wary government has kept inflation in check and promoted much-needed investments in power and transport infrastructure.

Moreover, Tanzania is second only to South Africa in terms of smart phone penetration, which suggests rapid gains in mobile banking and other financial services are likely in the offing.

Africa's fastest-growing economies
Photo by RayMorris1

How to invest:  The Dar es Salaam Stock Exchange is the purest way to participate in Tanzania’s growth, and it recently became more accessible when the government relaxed limits on foreign share ownership.

CRDB Bank is one of my favorite Tanzanian stocks. National Microfinance Bank and Tanzania Breweries also rank among the exchange’s most noteworthy shares.

Intrigued? Here’s a step-by-step guide to opening a Tanzanian brokerage account.

5. Rwanda
Average GDP Growth (2014-16): +7.3%

Is this the Sub-Saharan Singapore? The autocratic but undeniably effective government of Paul Kagame has transformed a destitute nation devastated by genocide into one of the most business-friendly countries on earth.

State of the art communications infrastructure, zero tolerance for corruption, policies that foster entrepreneurship, and a rapidly growing tourism industry all have the country positioned for long-term growth.

How to invest:  Rwanda’s fledgling stock exchange gives investors a couple of worthy opportunities; Bank of Kigali and Bralirwa, the country’s largest brewery. You can read some tips on opening a Rwandan brokerage account here.

Many Kenyan companies are also making big bets on Rwandan growth. The most prominent include Equity Bank, KCB, and ARM Cement.

4. Chad
Average GDP Growth (2014-16): +7.5%

Rapid economic expansion in dusty, landlocked Chad is driven by the exploitation of oil, which it pipes down through Cameroon to the Gulf of Guinea. This isn’t a great recipe for sustainable, inclusive growth. The vast majority of Chadians rely on subsistence agriculture, but the livestock, cotton, and gum arabic industries do hold some promise.

How to invest:  Prospective Chad investors have very limited options at present, especially if they’d like to steer clear of oil companies. But two Nigeria-listed banks operate in the country. Ecobank maintains a network of 14 branches there, while UBA Group has another three.

3. Mozambique
Average GDP Growth (2014-16): +8.4%

Ah, Mozambique. The land of idyllic beach holidays is now also home to huge offshore gas reserves. Their discovery and a planned LNG plant are two reasons why the country is likely to sport growth rates north of 8%. Big infrastructure projects and the resumption of coal mining in the northern Tete province will also contribute.

Unfortunately, these mega-projects have not, as yet, made much of a dent in poverty rates, and conflict between the ruling Frelimo and opposition Renamo parties is increasingly violent. A free, fair, and peaceful presidential election this October would do wonders for investor confidence.

How to invest:  Do you have cash that you’d like to spend some time in Mozambique? Then you might want to try the sleepy Bolsa de Valores de Mozambique.

The BVM is home to four stocks, including the local brewery (Cervejas de Mozambique) and Companhia Mozambiquana de Hidrocarbonetos, a firm with rights to develop the Pande and Temane natural gas fields. Contact one of the BVM’s licensed brokers to open a trading account.

2. South Sudan
Average GDP Growth (2014-16): +8.5%

Africa’s newest country makes this list mostly because it’s got upwardly mobile neighbors, relative stability compared to its war-wracked past, and because it essentially has nowhere to go but up.

The prospect of renewed civil war is significant, but the benefits that come from being the first-mover in an oil-rich nation of 11 million people have proven difficult for many East African companies to resist.

How to invest:  The easiest way to gain exposure to the South Sudanese economy is via a handful of regionally-oriented Kenyan stocks. The most prominent of this group is KCB Bank. It operates 19 branches in the country, and they contribute roughly 10% of the group’s profits. Others include CIC Insurance, Britam, and Equity Bank.

1. Sierra Leone
Average GDP Growth (2014-16): +11.3%

Thanks to the launch of some big iron ore mines, this little West African country is one of the fastest-growing countries in the world.

After a decade-long, diamond-fueled civil war, Sierra Leoneans know well that mineral wealth can be a curse as much as a blessing. So, the government is trying hard to diversify the economy and spread the benefits of mining development equitably.

Hundreds of kilometers of roads have been built or upgraded. More power has been added to the electricity grid. And reform is underway to reduce corruption and to provide free health care. After all its people have been through, Sierra Leone is truly a nation to root for.

How to invest:  Sierra Leone is home to a very nascent, illiquid stock exchange. Shares of the government-controlled Rokel Commercial Bank trade there, but, unless you live in Sierra Leone or are an extremely adventurous sort, you may be better off waiting a few years before opening a brokerage account there.

Alternatives include Nigeria-listed Ecobank, UBA Group, and Guaranty Trust Bank. All of which operate bank branches in the country. And Courteville Business Solutions, an e-commerce company that also trades on the Nigerian Stock Exchange, does substantial business there.

Your Turn

Do you know of other ways to invest in any of these fast-growing African economies? Tell us about them in the comments!

Related Reading

So Long BRICS, Make Way for the KINGs!
African Governance Scores: Who’s Up, Who’s Down, and Why Investors Should Care
Africa’s 10 Most Transparent Countries

16 thoughts on “Africa’s 7 Hottest Economies (and How You Can Invest in Each One)”

  1. Tell you about Mozambique.
    I suggest housing to rent (to oil&gas companies) and business hotels, in Pemba, northern Mozambique, near LNG plants. I am working there directly. Contact me if interested.

    1. I would like to know about Kenya I speak English will I have language barrier.what investment would you recommend for do they treat pole from other (are they racists)

  2. Yet Mozambique. World Bank (Mr. Andrew Burns) also says mozambican debt is not sustainable in the long term…

  3. sorry, Jhon. Writing e-mail address is not allowed.
    Feel free to drop a line in the main address you find in my office website.
    Just click on my name on the post and you will be redirect to it.

  4. Very interesting post.
    In Kenya, we are growing and developing really fast. Am into selling properties and i would advice any Kenyan investors.

    1. Thanks, Jennifer. Which areas of Nairobi offer the best return on investment for property investors these days?

  5. well stated. what is your take on the impact of the elections in relation to emergence of tz as leading investment destination?

    best regards.

    mark g

    1. Thanks, Mark. It doesn’t appear that there are major policy differences between CCM and the opposition, so, as long as the election appears fair and the aftermath remains largely peaceful, I don’t anticipate the election will do much to alter Tanzania’s long-term outlook.

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