Internet Solutions
Internet Solutions

There's an intriguing contest under way between African countries to emerge as the “gateway” to doing business in Africa.

South Africa, the continent’s largest economy by GDP, can lay claim to being the “gateway” to doing business in Africa by virtue of its size, sophistication and connectivity of its economy to the rest of Africa and the globe.

But in the past decade, a series of policy missteps, bouts of xenophobia, a clumsy foreign policy and a deteriorating business environment has seen the country lose significant ground to other nations.

By contrast, Mauritius, Morocco, Kenya and even Dubai have intensified their efforts to become the preferred launchpads for businesses with a pan-African focus.

As the race heats up, who will emerge as the favourite for this prestigious title?

We examine the strengths and weaknesses of each contender:

South Africa

Despite its geographic location, South Africa’s advantages are well-documented. From its roads and ports, to its well-developed financial, commercial and legal sectors, it is more advanced than any country on the continent. It consistently tops the Ernst and Young Africa attractiveness index.

Yet for investors, frequent policy “own goals” have seen South Africa’s status slip dramatically. Uncertainty in the finance ministry, an unresolved Mining Charter, rigid migration and labour laws, deteriorating creditworthiness and a cumbersome regulatory environment are just some of the factors that have sullied the investment climate. Companies such as General Motors have announced their withdrawal from the country after 90 years while the domestic corporate sector remains sceptical and reluctant to invest. Uncertainty over land reform and the complementary issue of private property rights are increasing the existing anxiety.

As a small open economy in global terms, South Africa is subject to significant currency volatility which complicates financial planning. This uncertainty acts as a deterrent to the "bricks and mortar" investment.

Add to this the difficulties in obtaining work permits, high data costs, exchange controls and personal safety issues, make investors increasingly ambivalent towards South Africa as an investment destination. Foreign direct investment (FDI) has suffered drastically in the past decade. Bloomberg data shows that South Africa's FDI net inflow dropped from almost $10 billion in 2008 to $2.2 billion in 2016. All the while, the economy has continued to remain stagnant.

However, under Cyril Ramaphosa's administration, there are early signs of an attempt to use foreign policy as an economic stimulus. This is seen in the relatively outward-looking $100 billion investment drive and President Ramaphosa’s engagement in global and regional politico-economic matters.

But regaining lost gravitas will not happen immediately and requires a major effort to improve the costs and ease of doing business. Importantly, the country must address perceptions that it's patronising from a diplomatic and corporate perspective. South Africa also urgently needs to become more competitive, enhance its digital infrastructure and improve skills levels to take advantage of the Fourth Industrial Revolution.


Mauritius has been the biggest beneficiary of South Africa’s missteps. The island nation, which is renowned for its nimble and creative policymaking, has made huge strides in attracting new investment and capturing the flows that have traditionally been routed through South Africa.

This is most evident in the financial sector where private equity firms and multinational companies have used Mauritius as a launchpad into Africa. Due to preferential tax structures, an investment-grade credit rating, no exchange controls, political stability, a predictable regulatory environment, and a skilled and multilingual workforce, Mauritius has emerged as the preferred destination for businesses with African interests.

These efforts have seen several Treasury functions or companies and banks moving to Mauritius. This success has also been reflected in the numbers. According to the Bank of Mauritius, in 2016 alone, the island nation had a 46% surge in FDI. The investment group, Credentia, states that in 2016, 70.8% of FDI was channelled into developing economies, particularly those in Africa. Meanwhile, in its annual 2016/2017 report, the Financial Services Commission noted a 9% rise in investments from Mauritius to the rest of Africa.

Mauritius has also signed several Double Taxation Avoidance agreements with African countries which have boosted intra-continental trade, while its relationship with India and China make it a logical choice for multiple jurisdictions with an Asian focus. Meanwhile, at 25th worldwide, it now boasts the best ease of doing business ranking in Africa (significantly higher than South Africa at 82) in the World Bank 2018 report.

But the reality is that Mauritius is a niche player and lacks the scale and connectivity to be anything more than a financial hub. In this sense, the island nation should be viewed as a financial gateway and not a real economy gateway. So it is a complementary offering and not a substitute for any African strategy that requires physical operations and scalability.

Mauritius is also still battling misguided perceptions about being a “dodgy tax haven” and just a tropical holiday destination.

Given its historical ties with Asia and its significant dependence on Europe, its engagement with African countries takes it into new and uncharted territory. Although its intentions in this regard are positive, with a more “Afrocentric” policy orientation and an improved level of cultural intelligence, empathy and sensitivity will be necessary across diplomatic and business spheres to make this pivot successful.


Since 2013, under the leadership of King Mohamed VI, Africa and not  Europe has become the focal point for Morocco’s foreign policy. The kingdom rejoined the African Union in January 2017 after an absence of 30 years. This move was aimed at cementing closer ties with the continent.

This rapprochement has seen a significant uptick in investment, particularly in countries in francophone Africa. The Ivory Coast in particular has benefited from this strategy with such banks as Attijariwafa  gaining a sizeable foothold in this market. Insurer SAHAM, which is active in 26 African countries with more than 60 subsidiaries, has also followed the trail of Moroccan banks moving to sub-Saharan Africa.

In April 2019, Morocco announced plans for a 5 700km regional gas pipeline with Nigeria which spans five countries. This is a clear statement of intent in its quest to expand to the rest of the continent. Meanwhile, Royal Air Maroc recently announced plans to launch flights to five other African cities including Harare and Maputo.

Morocco is the second leading country on the continent for FDI in sub-Saharan Africa – trailing only South Africa. In 2016, Morocco was praised by African Development Bank President Akinwumi Adesina for driving 85% of its foreign investment to the continent. Moreover, from 2008 to 2016, Morocco’s trade with sub-Saharan Africa increased at an average annual rate of 9.1% – a sign of its growing influence and strategic intent.

Through numerous big-ticket conferences, the country has also tried to display its business-friendly nature while the king has exercised soft power and built strategic ties through various state visits. With comparative advantages in Islamic finance, agriculture, renewable energy and digital infrastructure, the country is now betting on increased activity south of its borders as an economic catalyst.

For Morocco, the intention is clear – it wants to become the gateway between the Arab world, Europe and Africa. However, it faces several  challenges in its quest to become a true business hub.

The first obstacle is to overcome the mistrust between itself and fellow African nations because of its significant historical baggage which has led to strained diplomatic ties.

Repairing damaged relationships with other African countries will require more than a charm offensive. Critics are unhappy with Morocco’s “un-African” behaviour and believe the pivot to sub-Saharan Africa is “opportunistic”. The well-documented Western Sahara issue also sets it on a collision course with many African countries who believe that its continued occupation of the Sahrawi state is a demonstration of its colonial and un-African inclinations.

The fact that Moroccans have a greater affinity with Arab and European nations is a clear source of friction. How these complicated identity politics are navigated will determine whether the country successfully achieves “gateway status” or not.


This is a peculiar one. Dubai is a wildcard but for many, it's the logical place to run an Africa portfolio. According to Ahmed Salim, a Dubai-based Africa analyst at Teneo Intelligence, the Emirate’s developed infrastructure, ease of doing business and interconnectivity between Asia and Africa constitute a considerable advantage for businesses with a pan-African focus.

“These factors provide a level of competitiveness that hubs like Nairobi and Johannesburg do not have. There is also the added layer of the United Arab Emirates’ (UAE) foreign policy and strategic decisions that have had a knock-on effect in promoting UAE-Africa trade and investment links,” says Salim.

But he adds that the most compelling drawcard is connectivity. “A majority of African cities are only between three to eight hours away from Dubai, so it is already a key gateway to Africa. And until it is cheaper to fly from Nairobi or Dar-es-Salaam to Johannesburg than it is from Dubai to Johannesburg or Dubai to Dar-es-Salaam, will remain a key advantage for Dubai.”

However, the inherent problem is that Dubai is not in Africa. For Africa- focused entities, there is no substitute for on-ground operations. To be taken seriously, companies must have a physical presence on the continent – not only for local knowledge but for relationships too.

The “suitcase banking approach” of parachuting in and out might have worked in the past, but in today’s context it  is not a viable or sustainable option given the complexities and nuances associated with doing business in Africa. So despite its attractiveness, Dubai is not a substitute regional head office in Africa, it is a “nice to have” rather than a “must have”.


Nairobi is fast emerging as a technology hub for Africa. The country, which gave birth to M-pesa, has now ramped up efforts to grow its nascent fintech sector, famously known as Silicon Savannah.

With the highest Internet penetration rate in Africa, and rapidly improving digital infrastructure, Nairobi has earned the title of Africa’s most “intelligent city”, according to the Intelligent Community Forum.

It is also seen to have a more supportive legislative and policy environment for tech startups, particularly in the telecoms and banking sector, according to Erik Hersman, the founder of I-hub. And with an oil and gas boom in east Africa, strong and growing geopolitical interest from the East and West, not to mention its status as the regional economic dynamo, Kenya, and more specifically its capital Nairobi, is making an attractive play as the preferred launchpad for pan-African investors. Throw in its educated population (especially in terms of STEM graduates), banking sophistication and infrastructure drive, the outlook is positive for Kenya.

But corruption, security fears and political and policy uncertainties remain key issues for investors. Low levels of development and considerable red tape and bureaucracy in the business environment are also major deterrents, as evidenced by the debacle over the country’s interest rate cap.

Ultimately, as a single B-rated country, Kenya does not offer the level of institutional maturity and investor protection that some of its competitors do nor does it have the balance sheet to fund big-ticket continental investments. Like Mauritius, it lacks the scale to seriously compete with South Africa on a standalone basis, but it has several distinct advantages, most importantly its regional access and technological know-how which can be leveraged.

So who should investors choose as Africa’s gateway?

Unfortunately, there is no simple answer to this question.

A gateway status depends on the type of business a company wants to engage and its time horizon. For example, building a factory in a country is very different to investing in a fintech startup or establishing a bank. Geographic considerations, cultural and linguistic symmetry and historical relationships also have a bearing on a company’s preferred choice. For example, French money flows to Morocco while Gulf nations prefer to operate from Dubai. Similarly, Western money finds a natural fit in such cities as Nairobi and Johannesburg.

Overall, South Africa remains the preferred option from the perspective of  scale and practicality while Mauritius has forged a distinct financial sector niche. Nairobi’s growing tech scene and access to the east African market make it an attractive option while Morocco, although a latecomer to the race, has ambitions and is worth watching. Meanwhile, Dubai appeals to investors whose African operations fall within their Middle East and north African regional offerings.

Ultimately, each of these destinations has unique selling points and can carve its own niche. However, what is important for each country to understand is its relative strengths and limitations and how to “box clever.” It is possible to create complementary, rather than competitive hubs for investors and offer holistic and practical solutions that cater to specific needs.

If done properly, these positive externalities can enhance growth prospects, not only for the countries in question, but for Africa as a whole.

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