Dar es Salaam — TANZANIA has overtaken Kenya as East Africa’s most attractive investment destination, climbing three spots to ninth in Africa, according to Rand Merchant Bank’s “Where to Invest in Africa 2025/2026” report.
The leap, up from 12th position last year, reflects institutional investor preference for macroeconomic stability and large-scale, de-risked capital projects like the country’s railway and energy infrastructure.
According to the report, this prioritisation of foundational economic stability over the rapid-growth, high-tech volatility of some neighbours is dictating capital flows to the country.
Compiled in collaboration with the Gordon Institute of Business Science (GIBS), the index ranks 31 African nations based on four key pillars: economic performance and potential, market accessibility and innovation, economic stability and climate investment and social and human development.
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According to the report, Tanzania success is anchored in a persistent focus on foundational economics.
Its consistent annual GDP growth, forecast near 6 per cent for the upcoming fiscal year, paired with one of the region’s lowest inflation rates, provides a critical anchor against global and regional volatility.
The country’s unique appeal lies in its combination of a large consumer market, strategic Indian Ocean access and vast natural resource wealth.
The continued investment in the Standard Gauge Railway (SGR) and sustained advancements in the 42 billion US dollars Liquefied Natural Gas (LNG) project negotiations signal an unwavering, long-term commitment.
However, capital deployment remains sensitive to institutional bottlenecks.
The report says investors frequently cite regulatory complexity, particularly around land tenure and licensing, and the need for deeper and more liquid capital markets as key headwinds that could slow investment momentum despite the strong macro picture.
“Tanzania has mastered the art of providing a stable, predictable platform for megaprojects,” said a regional economist at a Johannesburg based investment bank.
“For major infrastructure funds, that certainty is worth more than a quick return in a volatile market.”
Kenya slipped behind Tanzania despite rising one place to 10th overall.
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Its investment appeal, rooted in its deep capital markets and dynamic tech sector, has been tampered by heightened sovereign debt concerns and currency market volatility.
This macro-risk premium has successfully nudged major long-term investors toward Tanzania’s steadier course.
Ranked 15th, Rwanda remains an outlier for its exceptional governance and highly efficient business climate.
However, its small market size and landlinked status continue to limit its ability to attract large-scale industrial capital.
Uganda, in 20th place, is betting on future oil output and agriculture to attract capital, though its infrastructure and financing gaps persist.
On a continent-wide basis, the small island economies of Seychelles and Mauritius retained their rankings as Africa’s most attractive investment destinations, outperforming larger economies including Egypt, South Africa and Morocco.
RMB chief economist Isaah Mhlanga noted that the island nations stood out in a year marked by significant geopolitical shifts, including US trade tariffs and policy changes stemming from a number of elections across the region.
“Episodes of unrest and policy uncertainty, and the global fracturing and reorientation have all had measurable macroeconomic effects,” Mhlanga said in the report.
“Changes in the political and the subsequent policy environment and declining foreign aid, coupled with the redirection of global capital flows, are reshaping how African economies engage with the world.”
