Tanzania overtakes Kenya on best investment destinations in region

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Tanzania has beaten Kenya on the best investment destinations for investors eyeing the region in the next two years. PHOTO | FOTOSEARCH

Tanzania has beaten Kenya on the best investment destinations for investors eyeing the region in the next two years.

Fourteen percent of the respondents in a survey conducted by advisory firm KPMG on 150 C-suite level and senior executives in the region said they would consider investing in Kenya, tying the country with Ghana in fourth spot of preferred destinations of capital, behind South Africa (50 percent), Nigeria (30 percent) and Tanzania (15 percent).

Dealmakers expect to ramp up investments into sub-Saharan Africa in the next two years, with economies such as South Africa, Nigeria and Kenya that serve as regional investment hubs expected to benefit the most from this positive trend.

The survey findings show they expect the oil and gas, consumer goods, mining, fintech and industrial sectors to attract the bulk of inward investment.

The respondent group was divided equally between domestic investors (based in SSA) and international investors, comprising a 70 percent to 30 percent mix of strategic and financial investors respectively.

Analysis by KPMG shows that the SSA region reported mergers and acquisitions worth $19.2 billion (Sh2.87 trillion) last year, from a reported 297 deals.

‚ÄúJust under three-quarters of respondents (74 percent) say they are considering an acquisition or investment in SSA in the next two years, including 71 percent of international buyers who report this. Additionally, 77 percent of all respondents are considering injecting more capital into existing acquisitions, indicating a commitment to expanding their presence in this part of the world,‚ÄĚ said KPMG in the survey.

The executives were surveyed based on their experience in deal making in SSA over the last four years.

The findings have come against the background of capital flight from the region due to high returns on offer in developed markets.

Weakening currencies, including, have also made investors wary of committing capital in the region, due to exchange losses when repatriating dividends.

Shortages of hard currency have also made it more difficult to move returns out of the continent.

The solution, according to KPMG, is for investors to adopt a longer investment horizon when committing to regional acquisitions, with a willingness to reinvest dividends and profits when the cyclical forex shortages strike.

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Note: The results are not exact but very close to the actual.