Onome Amuge
Africa’s smallest economies are increasingly shaping the continent’s investment narrative, as Seychelles and Mauritius consolidate their lead in Rand Merchant Bank’s latest “Where to Invest in Africa index”. Their ascent reflects a growing investor appetite for compact, highly governed jurisdictions at a time when Africa’s largest markets, most notably Nigeria, are navigating the turbulence of structural reform.
RMB’s 2025/2026 index reaffirms that small states with limited natural resources but sophisticated financial architectures are outperforming Africa’s big commodity producers in attracting global capital, a trend that has been developing quietly for years. Mauritius and Seychelles, long-known offshore and services hubs, now occupy a position in the continent’s investment hierarchy that belies their size.
Their rise coincides with a moment of pronounced volatility among Africa’s heavyweight economies. Nigeria, which dominated investor sentiment for more than a decade, has dropped nine places to 18th, its heaviest decline since RMB launched the index.
The report shows that Mauritius and Seychelles benefit from limited exposure to commodity cycles, streamlined regulatory regimes, and governance systems calibrated to international compliance standards. Nigeria, by contrast, is attempting to unwind decades of currency and subsidy distortions while wrestling with inflation and fiscal stress, all underpinned by one of the continent’s most politically complex reform environments.
RMB’s assessment makes clear that Nigeria’s fall is less an indictment of its underlying fundamentals than a reflection of data volatility unleashed by its currency reforms. In June 2023, President Bola Tinubu collapsed the country’s multiple exchange-rate windows into a unified, market-driven system, dismantling a long-entrenched mechanism that business leaders often criticised as opaque. The reform triggered a sharp repricing of the naira, from N463/$ at the time of unification to N897/$ by year-end. The resulting compression in dollar-denominated GDP was swift as Nigeria’s economy appeared to shrink from $374.95 billion to $187.64 billion before subsequent statistical adjustments.
This recalibration has had significant consequences for comparative indices. Market size, historically Nigeria’s most powerful competitive advantage, is suddenly harder to measure in a way that reflects the real scale of domestic activity. The recent GDP rebasing conducted by the National Bureau of Statistics (expanding the economy by 30 per cent through the inclusion of digital services, pensions, and a broader slice of informal activity), highlights the tension between statistical accuracy and currency volatility.
In contrast, Seychelles and Mauritius benefit from currencies more insulated from such swings and from economic models less dependent on a single export. Their appeal lies in specialisation, comprising wealth management, tourism, professional services, and a regulatory reliability that multinational firms increasingly prize.
Nigeria’s more challenging trajectory stems in part from structural burdens that small island economies do not carry. Its oil dependence remains a critical vulnerability. RMB’s comparison with Saudi Arabia illustrates the scale of the challenge. Where Saudi Arabia produces around 9 million barrels per day for a population of 35 million, Nigeria pumps roughly 1.5 million barrels for more than 232 million people. At $67 per barrel, Saudi output equates to $6,300 per capita; Nigeria’s, just $161. This disparity shapes fiscal capacity, currency resilience, and ultimately, investor confidence.
Fiscal conditions have deteriorated as oil prices slipped below Nigeria’s 2025 budget benchmark of $75, increasing pressure on external reserves. Inflation has compounded the strain. The elimination of petrol subsidies in mid-2023( intended to stabilise public finances) triggered a 167 per cent spike in pump prices, filtering rapidly into food and transport costs. The government’s subsequent decision to cap petrol and electricity prices effectively reintroduced implicit subsidies, which the IMF warns could absorb up to 3 per cent of GDP.
Against this backdrop, the index’s top performers appear almost frictionless. Their ability to maintain steady monetary policy, enforce contract reliability, and deliver transparent regulation gives them an outsized presence in Africa-focused strategies. For some investors, they serve as continental gateways such as low-risk jurisdictions from which to manage higher-risk allocations.
Yet Nigeria’s fall in the index is not synonymous with investor retreat. Recent GDP data show resilience. The economy expanded 3.98 per cent year-on-year in the third quarter of 2025, extending growth driven by improvements in oil production and sustained dynamism in services and technology. RMB’s analysts stress that the WTIIA model typically registers gradual changes, and Nigeria’s sharp movement reflects a convergence of currency shocks and reform disruptions rather than systemic deterioration.
