When considering investment destinations in East Africa and the Indian Ocean, Madagascar and Kenya offer contrasting landscapes.

While Kenya is a well-established regional hub, Madagascar presents a frontier market with vast untapped potential. This article provides an overview for business investors to weigh the pros and cons of each.

Aperçu géographique

Kenya

Situated on the East African coast, Its strategic location makes it a gateway to the larger East African market and a key regional trade hub.

Kenya covers an area of approximately 580,367 square kilometers, comparable in landmass to Madagascar. It boasts diverse landscapes, including coastal plains, arid and semi-arid lands, fertile highlands, and the Great Rift Valley, which runs through the country.

Its wildlife, particularly in its extensive national parks and reserves, is world-renowned, driving a robust tourism sector.

Kenya’s climate varies significantly by region. The coast is hot and humid, while the highlands, including Nairobi, enjoy a temperate climate. 

The northern and northeastern parts are arid and semi-arid. Kenya experiences two main rainy seasons: the “long rains” from March to May and the “short rains” from October to December. It is also vulnerable to climate change impacts, including droughts and floods.

Madagascar

Madagascar is a large island nation located in the Indian Ocean, approximately 400 kilometers (250 miles) off the eastern coast of Southern Africa, east of Mozambique.

Its insular nature means it’s less directly integrated into continental African trade routes compared to Kenya.

As the world’s fourth-largest island, Madagascar spans 587,040 square kilometers (226,660 sq mi). It is renowned globally for its extraordinary biodiversity, with a vast majority of its flora and fauna found nowhere else on Earth. 

Madagascar experiences a diverse climate due to its size and varied topography. The east coast is generally hot and humid with significant rainfall, while the central highlands have a more temperate, cooler climate. The west and southwest are drier, with semi-arid conditions in some parts. It is susceptible to tropical cyclones, particularly during the wet season (November to April), which can impact agriculture and infrastructure.

Economic Overview and Outlook

Kenya

Kenya has a more robust and diversified economy compared to Madagascar. It’s a regional economic powerhouse with a significant service sector, strong financial services, and a growing manufacturing base.

Its GDP growth has been relatively strong (around 4.7% in 2024, projected for 5.3% in 2025), though it faces challenges such as high public debt (around 65.5% of GDP) and elevated lending rates.

The Kenyan government actively seeks foreign direct investment (FDI) and has implemented tax and regulatory reforms to improve the investment climate. 

Madagascar

Madagascar remains one of the world’s poorest countries with a high poverty rate. The country nonetheless possesses abundant natural resources (minerals, agriculture, marine) offering many opportunities for businesses.

Attracting foreign investment and promoting economic development are part of the Government priority, with the promulgation of the new investment law in 2023.

Growth is therefore projected to average 4.7% from 2025 to 2027, with industrial production (including textiles and mining) and services expected to lead the expansion.

Key Investment Opportunities

Both countries have their own key sectors, offering opportunities for potential investors. 

Kenya

• Manufacturing: A strategic entry point into a dynamic and growing market, with government commitment to industrialization.
• Agriculture: Opportunities in agribusiness, especially with improved rainfall forecasts and demand for diverse, high-value food products.
• ICT and BPO: Kenya is a leading tech innovation hub in Sub-Saharan Africa (“Silicon Savannah”).
• Financial Services: Deepest and most sophisticated capital markets in East Africa.

Madagascar

• Mining: Large quantities of mineral resources (gemstones, industrial stones, oil, rare metals). Strong global demand for minerals like graphite, nickel, and cobalt.
• Agribusiness: Vast agricultural potential, favorable climate for varied crops, growing organic farming market, processing of fruits/vegetables, essential oils, and a key fishing sector.
• Tourism: Unique biodiversity and natural attractions make it an undervalued tourist destination with high growth potential, especially in eco-tourism. The government has identified numerous investment sites.
• Textiles, Clothing and Accessories: Leading exporter in Sub-Saharan Africa to Europe, with skilled labor and competitive costs. Benefits from AGOA and EPA.
• ICT: Fastest broadband internet connection in Africa, with tax exemptions for new businesses and competitive labor costs.

Considérations pratiques pour les expatriés

Kenya

The official languages are Swahili and English. English is widely used in business, education, and government, making it relatively easier for English-speaking expats to integrate. 

Internet and mobile connectivity are more widespread and generally more reliable than in Madagascar. Nairobi is a major regional hub with excellent international flight connectivity.

Living Standards and Infrastructure: Living standards in Kenya, particularly in cities like Nairobi, are higher than in Madagascar. There’s a more developed expatriate community with a wider range of housing options, international schools, and healthcare facilities. 

The overall infrastructure is more robust, supporting a more comfortable lifestyle for expats. The cost of living in Nairobi can be comparable to some Western cities for certain goods and services.

Madagascar

The official languages are Malagasy and French. While French is widely used in business, government, and among the educated populace, Malagasy is the national language and spoken by everyone. 

While more and more young people are English speakers, with a B1 or B2 level, proficiency in French is highly beneficial for expats.

Internet connectivity is available in major towns and cities, with some of the fastest broadband speeds in Africa. Mobile phone coverage is widespread in urban areas. 

Direct flights to Antananarivo have resumed from various international hubs (e.g., Paris, Addis Ababa, Nairobi).

Living standards in Madagascar are generally low, with a high poverty rate. Access to quality housing, healthcare, and education can be limited, especially outside Antananarivo.

Infrastructure is a significant challenge, impacting daily life and increasing the cost of doing business and living. Power outages are common.

What Country Is Right for You?

Criteria	Choose Kenya if	Choose Madagascar if
Market maturity	Established, diversified market with larger consumer	Frontier market with untapped potential
Infrastructure and legal environment	Stronger infrastructure, more developed financial sector, greater legal predictability	Greater infrastructural, bureaucratic, and governance challenges
Regional position	Regional hub for East African Community	Emerging, more isolated market
Expats and amenities	Easier expat environment with better amenities and services	Less developed expat support; immersive local experience
Investment sectors	Financial services, technology, agriculture and manufacturing	Mining, large-scale agribusiness, eco-tourism, IT, clothing

Both Madagascar and Kenya offer unique opportunities and challenges for investors. The choice between them ultimately depends on what you are comfortable with.

If you’re looking for more in-depth information and personalized guidance regarding investing in Madagascar, Madagascar Invest can help. Our local expertise and on-the-ground presence will smooth the process to help you make investments or expand your business.