Tanzania has emerged as the leading investment destination in East Africa, outshining Kenya in a recent survey conducted by advisory firm KPMG.
The survey, which polled 150 C-suite level and senior executives in the region, revealed that 15 per cent of respondents considered Tanzania the preferred choice for investments in the coming two years, positioning it ahead of Kenya and Ghana in the race for capital inflow.
The survey, which focused on the potential investment landscape in sub-Saharan Africa, highlighted South Africa as the most sought-after destination, with 50 per cent of respondents expressing interest, followed by Nigeria at 30 per cent and Tanzania at 15 per cent.
Kenya and Ghana were tied for the fourth spot, with 14 per cent of respondents indicating their intention to invest.
Dealmakers and investors have high expectations for sub-Saharan Africa in the near future, with economies such as South Africa, Nigeria, and Kenya, which serve as regional investment hubs, expected to reap the most benefits from this positive trend.
Industries like oil and gas, consumer goods, mining, fintech, and industrial sectors are anticipated to attract the majority of inward investment.
The survey, which included a balanced mix of domestic and international investors, revealed that nearly three-quarters of respondents (74 per cent) are contemplating acquisitions or investments in sub-Saharan Africa over the next two years. This sentiment is shared by 71 per cent of international investors surveyed.
Furthermore, 77 per cent of all respondents expressed their intentions to inject additional capital into existing acquisitions, underscoring their commitment to expanding their presence in the region.
The data presented by KPMG indicates that mergers and acquisitions in the sub-Saharan Africa region were valued at $19.2 billion (Sh2.87 trillion) last year, stemming from a reported 297 deals.
"Just under three-quarters of respondents (74 per cent) say they are considering an acquisition or investment in SSA in the next two years, including 71 per cent of international buyers who report this," KPMG stated in the report.
"Additionally, 77 per cent of all respondents are considering injecting more capital into existing acquisitions, indicating a commitment to expanding their presence in this part of the world."
The survey participants, primarily seasoned dealmakers, were selected based on their experience in conducting business in sub-Saharan Africa over the past four years.
Their insights come against the backdrop of capital flight from the region, driven by the allure of higher returns in developed markets.
The depreciation of local currencies has also raised concerns among investors, who fear losses during the repatriation of dividends.
Additionally, the shortage of hard currency has compounded the difficulties associated with moving returns out of the continent.
KPMG's recommended solution to address these challenges is for investors to adopt a longer investment horizon when making regional acquisitions.
This approach would require a willingness to reinvest dividends and profits, particularly when facing cyclical foreign exchange shortages.
Tanzania's ascent as the top investment destination in East Africa underscores the evolving dynamics in the region's economic landscape, as investors weigh their options in an ever-changing global market.