Morocco has overtaken South Africa as Africa’s fourth-most attractive investment destination, reflecting the North African country’s growing manufacturing base, stable economic conditions and success in attracting foreign investment, according to the latest rankings by Rand Merchant Bank (RMB).
The shift highlights how investors are weighing countries’ growth prospects and industrial capacity alongside established financial markets. South Africa retains deep capital markets and has made progress in improving energy security, but slower economic growth has weakened its position relative to Morocco.
Why Morocco is gaining ground
Morocco’s automotive industry has become a major driver of its investment appeal, helping the country establish itself as an important manufacturing hub. Its ability to attract foreign direct investment (FDI), alongside relatively stable macroeconomic conditions, has strengthened its position.
‘The country has emerged as one of Africa’s leading manufacturing hubs, particularly in automotive production, while maintaining macroeconomic stability and attracting substantial foreign direct investment,’ RMB said in its report.
Manufacturing matters because it can draw investment into factories, supply chains, logistics and skilled jobs, while generating exports beyond raw materials. Morocco’s industrial base gives investors opportunities to serve both domestic and international markets.
Its performance also shows how a country can improve its standing by building productive industries and attracting capital into sectors that support exports and economic activity.
Why South Africa lost ground
South Africa remains one of the continent’s most developed financial markets, with established institutions and a relatively sophisticated business environment. Improvements in electricity supply have also helped ease a constraint on businesses.
However, its slower economic growth has weighed on its ranking. Morocco’s rise suggests that established financial markets alone may not be enough to maintain an advantage when competing countries offer stronger manufacturing prospects and attract more investment into productive sectors.
The ranking does not mean South Africa has lost its wider economic advantages. Rather, it reflects a comparison of several factors affecting investment attractiveness.
Nigeria and Côte d’Ivoire improve
Nigeria climbed seven places following reforms that included the removal of petrol subsidies and foreign exchange liberalisation. RMB said the changes had improved clarity about the country’s economic direction, although investors remain divided over the pace of recovery.
The higher ranking does not mean Nigeria’s economic problems have been resolved. Inflation, pressure on household purchasing power and high business costs remain important considerations for investors.
Côte d’Ivoire has also strengthened its position, rising from 16th place two years ago to seventh. Economic growth, infrastructure development, policy implementation and expanding hydrocarbon production have supported its progress.
Seychelles, Mauritius and Egypt retained the top three positions for the third consecutive year.
What the rankings measure
RMB assessed 31 African countries using 20 indicators grouped into four areas: economic performance and potential; market accessibility and innovation; investment climate; and social and human development.
The framework looks beyond the size of an economy or its financial markets to assess the conditions that help attract and sustain investment.
Morocco’s rise, South Africa’s decline and Nigeria’s improvement point to different factors shaping investor perceptions. Ultimately, rankings reflect relative attractiveness, while actual investment will depend on whether countries can turn their advantages into sustained growth, competitive businesses and reliable returns for investors.