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East Africa Africa's Economic Miracle

East Africa

The African Development Bank again highlighted East Africa as the most successful economic region in Africa. Regional GDP growth has been the highest on the continent for years.

This growth is driven primarily by the industrial and service sectors in Ethiopia and Rwanda, and the service and agricultural sectors in Tanzania and Kenya. In 2019, Rwanda and Tanzania grew by 10.1% and 6.3% respectively.

East Africa is on the best way to become a promising investment and production location.

African Development Bank

New African Free Trade Area

Due to the African Free Trade Area, customs duties on services and 90 % of customs duties on goods are to be eliminated. According to estimates, this will lead to a sharp increase in intra-African trade and wealth.

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Emblem of the African Free Trade Area (AfCFTA)
Comparison Countries Afica investing
Source: McKinsey & Company, Lions on the Move II, 2016

Some 25 years after the genocide, Rwanda is considered one of Africa’s greatest success stories.

German–African Business Association
Republic of Rwanda

After the genocide in 1994, Rwanda has become the biggest success story in Africa and is also called the ‘Singapore of Africa’.

VW has been building cars in Rwanda since 2018 and launched an e-mobility concept last autumn: “In Rwanda there is the political will to drive forward industrialisation and create jobs for the young population,” said Thomas Schäfer, Managing Director of VW South Africa. With its eleven million inhabitants, Rwanda is not the largest market, but “probably the most progressive and organized country in the sub-Saharan region,” said Schäfer. “We can learn a lot here and later implement it on a larger scale in countries like Ghana or Ethiopia.”

High-tech from Africa? Rwanda is developing into an African high-tech location. The Mara Phone is manufactured here since 2019: A smartphone 100% made (not only assembled) in and for Africa.

first volkswagen from rwanda paul kagame mlc properties
Paul Kagame at the opening of the VW plant in Kigali
mara phone from africa for africa kigali rwanda mlc properties
Mara Phone from Africa for Africa

Though we are a small country, we believe that we are forerunners. We are determined to become Africa’s innovation leader.

Hon. Francis Gatare, Director of the Rwanda Development Board (RDB)
United Republic of Tanzania

Tanzania is one of Africa’s economic engines and has a highly diversified economy. It is one of the most populous country in sub-Saharan Africa.

According to GTZ, it is a country with a high degree of political stability and an open, adaptable economic policy. Significant progress in the past has been accompanied by increasing integration into the global market, which opens up new opportunities for successful investments.

Tanzania has a rapidly growing production sector. This has attracted numerous foreign investors in recent years. Furthermore, Tanzania has developed into a transit and tourism country.

As a transit country, Tanzania handles a large part of the goods traffic from and to East Africa. The East African landlocked states of Burundi, Rwanda, Uganda and Zambia, depend on access to international shipping.

ppf tower sam nujoma road dar es salaam tanzania mlc properties
PPF Tower in Dar es Salaam, Tanzania
construction nssf mzizima towers dar es salaam tanzania mlc properties
View on the construction of the NSSF Mzizima Towers in Dar es Salaam, Tanzania

Real Estate Markets

Urbanisation

The real estate markets in Rwanda and Tanzania are characterized by far-reaching structural changes in the population. In general, both Rwanda and Tanzania are experiencing a very strong movement from the countryside to the cities. An impressive example is the Tanzanian business metropolis Dar es Salaam, where the population has grown from approx. 2.5 million inhabitants in 2002 to approx. 6.7 million in 2019. Other rapidly growing cities are the Rwandan capital Kigali and the Tanzanian cities Mwanza, Arusha and Dodoma.

Rising Educational Level

One important reason for the strong urbanization is the rising level of education, combined with a growing supply of jobs for higher-qualified jobs in the cities. This is accompanied by targeted government measures to improve the quality and quantity of educational opportunities, such as the expansion of universities. Rwanda’s government is expressly aiming to transform the country into a knowledge society – location decisions by Volkswagen and Mara Phones appear to confirm the success of this strategy.

High Economic Growth

Another important change in the population structure is also taking place against the background of high economic growth, which is accompanied by increasing prosperity and, correspondingly, a growing middle and upper class. This is not only leading to a growing demand for higher-quality housing, but also for higher-quality office and commercial space. Ultimately, the increasing prosperity leads to a demand for more and better tourist offers. The Rwandan real estate market around Lake Kivu and the real estate market on the east coast of Tanzania at the Indian Ocean benefit particularly from this.

Change in Consumer Behaviour

The growing prosperity and the associated purchasing power also leads to a change in consumer behaviour. Consumers are demanding more attractive shopping opportunities, and international brands are expanding their range of products and demand more sophisticated retail space.

Market Analysis

Knight Frank, Africa Report, 2020/21
Knight Frank, Africa Horizons, 2019
Knight Frank, Hotels Africa, 2018
PwC, Hotels Outlook: 2019-2023, 2019
CAHF, Housing Finance in Africa, Section: Rwanda, 2019
CAHF, Housing Finance in Africa, Section: Tanzania, 2019
traffic jam in kigali rwanda mlc properties
Street in Kigali, Rwanda
real-economic-growtcomparison rwanda tanzania germany usa africa

Average growth (2011-2020*)

Rwanda7,1 % p.a.
Tanzania6,2 % p.a.
Germany0,8 % p.a.
USA1,4 % p.a.

We in Africa have now understood that trade and investment, not financial aid, are the pillars of our development.

Paul Kagame, President of the Republic of Rwanda
inflation comparison rwanda tanzania usa germany mlc properties

Average inflation (2011-2020*)

Rwanda4.2 % p.a.
Tanzania7.0 % p.a.
Germany1.2 % p.a.
USA1.7 % p.a.
exchange rates comparison eur usd rwf tzs rwanda tanzania mlc properties

Average change (2011-2020*)

EUR/RWF4.3 % p.a.
EUR/TZS4.8 % p.a.
EUR/USD-1.9 % p.a.