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Morocco has surpassed South Africa as Africa's fourth-most attractive investment destination, according to the latest Where to Invest in Africa report by Rand Merchant Bank (RMB). This shift reflects Morocco's industrial expansion and economic growth, which contrast with South Africa's persistent structural constraints. Despite South Africa's economy being larger than Morocco's, Morocco's economy grew by 4.9% in 2025, compared to South Africa's 1.1%.

RMB attributes Morocco's rise to lower inflation, industrial development, export diversification, and infrastructure investment. Morocco's automotive industry is a key driver of its transformation into a manufacturing and export hub. The country produced 501,965 vehicles in 2025, accounting for 40.8% of Africa's vehicle production, with a significant portion coming from Renault and Stellantis plants. South Africa still produced more vehicles but experienced an 11.5% contraction in 2025.

Morocco's investment-friendly environment is further supported by its deliberate national strategy prioritizing automotive manufacturing, aeronautics, renewable energy, agri-food, and tourism. The African Development Bank's 2025 Africa Industrialisation Index ranks Morocco as the continent's highest-ranked industrial economy, while South Africa has faced a steady decline in industrial competitiveness.

Foreign direct investment (FDI) also favors Morocco, with net FDI inflows increasing from $1.1 billion in 2023 to $1.7 billion in 2024 and $3.3 billion in 2025, representing a 91% year-on-year rise. In contrast, South Africa experienced a net outflow of $2.3 billion in 2025, primarily due to Anglo American's divestment of its platinum unit.

South Africa's macroeconomic conditions, including a sustained electricity crisis and logistics problems, further hinder its competitiveness compared to Morocco. The country's inflation remained below 3% between 2024 and mid-2026, while South Africa's average inflation was 5% over the past five years. Morocco's lower and more stable inflation provides businesses with a more predictable operating environment and reduces borrowing costs.

Morocco's growing tourism sector, which recorded 19.8 million tourist arrivals in 2025 and $13 billion in tourism receipts during the first 11 months of the year, also contributes to its investment appeal. The country is co-hosting the 2030 FIFA World Cup and plans to invest $5 billion in related infrastructure, targeting 26 million annual tourist arrivals by the end of the decade.