For decades, Malaysia’s outward growth has been anchored in familiar markets. ASEAN, China, the United States and selected developed economies have served us well, but in an increasingly uncertain world, concentration is no longer merely a commercial preference – it is a strategic risk.
Malaysia’s Direct Investment Abroad (DIA) totaled RM622.1 billion at the end of 2024, with RM349.7 billion concentrated in Asia. This highlights our regional strength but also underscores the limited diversity of our outward investment base in relation to upcoming global demand.
Africa should now be regarded as part of Malaysia’s diversification strategy.
Malaysia is underinvested.
While Malaysian companies have a presence in Africa—particularly in oil and gas, commodities, infrastructure, hospitality, and selected services—many overlook Africa’s diversity and the wide range of growth opportunities it offers. Much of this involvement remains ad hoc, but this must change as we create a platform for long-term growth.
Africa accounts for a very small share of Malaysia’s outward investment, remaining below 2 percent despite the continent’s vast market and the alignment between Malaysia’s capabilities and Africa’s development needs. The goal is not to abandon mature markets but to build a more balanced outward strategy.
If Malaysia continues to invest only where others are already present, growth will be incremental. Africa presents a different proposition: higher growth potential, diverse sectors, younger demographics, and underdeveloped industries—providing Malaysian firms with opportunities to introduce tested, practical solutions suited to emerging markets.
Where Malaysia can win
Malaysia doesn’t need to compete with China, the United States, or Europe on scale. Our strength lies in our unique position—the “missing middle.’
We understand emerging market realities because we have lived them. Malaysia industrialized, urbanized, and diversified its economy within a single generation. We transitioned from heavy reliance on commodities and oil and gas to thriving sectors like manufacturing, services, Islamic finance, tourism, healthcare, digital systems, and value-added industries. This experience is highly relevant and offers lessons for Africa.
There are five key areas where Malaysia can be especially competitive:
First, the halal ecosystem. In 2025, Malaysia’s halal exports reached RM68.52 billion, backed by strong governance, credible certification, and thriving sectors like food and beverages, halal ingredients, palm derivatives, and pharmaceuticals. This is more than just a product focus—it’s a comprehensive system involving standards, certification, SME development, logistics, branding, and building trust.
Second, palm downstream and agro-processing. Africa boasts 60 percent of the world’s uncultivated arable land, and global food demand is set to increase significantly. Malaysia’s palm oil exports reached 16.9 million tonnes in 2024, with downstream segments like oleochemicals and finished products playing a vital role. The opportunity for Africa isn’t just exporting raw products—it’s about developing processing capabilities, standards, supply chains, supporting smallholders, and adding value.
Third, Islamic finance. Many African nations require long-term capital for infrastructure, agribusiness, energy, housing, and SMEs. Malaysia’s credibility in Islamic banking, sukuk structuring, takaful, and blended finance can be highly relevant, especially in markets with large Muslim populations and governments seeking alternative financing options.
Fourth, healthcare. Malaysia has built a robust healthcare ecosystem with excellent private providers, specialized capacity, medical tourism expertise, and cost competitiveness. In 2023, healthcare tourism generated RM2.25 billion with over a million visitors, aiming for RM2.4 billion in 2024. Africa’s growing middle class, urbanization, and healthcare gaps create exciting opportunities for hospital partnerships, diagnostics, digital health, training, and medical management.
Fifth, digital systems. Africa has already leapt ahead in mobile money, digital payments, and platform services. Malaysia’s role is not just to sell software but to bolster digital public infrastructure—identity systems, payments, service delivery, data management, and disciplined implementation.
Let’s think beyond conventional boundaries—by embracing these opportunities, Malaysia can inspire growth and innovation not just for ourselves, but as a catalyst for others to step out of their ‘box.’
Returns are attractive, but not automatic
Infrastructure investments in Africa have been cited as capable of generating low-to-mid teens US dollar returns for operational projects, and higher returns for construction-to-maturity projects. But this comes with a clear condition: investors need patience, strong local relationships, robust due diligence, and the right partner on the ground.
This is where many companies fail. They enter based on headlines. They follow a trend. They underinvest in local understanding. They assume a Malaysian solution can be copied and pasted. They do not spend enough time on political economy, offtake, regulation, payment risk, land issues, or local partnership quality.
Africa is often misunderstood as a single market, but this is a misconception.
East Africa boasts some of the continent’s fastest-growing and reforming economies.
West Africa has significant demographic weight and a large consumer base.
Southern Africa is more familiar to many institutional investors and provides more established entry points.
North Africa’s strategic proximity to Europe and the Middle East adds another dimension.
Each region faces different political conditions, consumer behaviours, regulations, currencies, risks, and growth patterns. For Malaysian businesses, the question should not be “Should we enter Africa?” but rather, “Which country, sector, partner, and route to scale?”
Today, Africa resembles early ASEAN markets; fragmented, with uneven regulations and infrastructure gaps. However, these challenges also create opportunities for first movers who understand local contexts and build patient partnerships. Such early entrants can not only follow market trends but also help shape the market’s development.
The effective approach is clear: select countries committed to reform; focus on sectors aligned with national priorities; collaborate with credible local partners; target actual demand rather than just market size; and approach with patient capital. Localise successful strategies from Malaysia and scale carefully, debunking the misconception that Africa is a uniform, easily accessible market.
The real opportunity is in execution
At PEMANDU Associates, our experience in Africa has reinforced one important lesson: plans do not transform economies. Execution does.
When PEMANDU was part of the Malaysian Government, the National Transformation Programme was built around aligning public sector priorities, citizen needs, and private-sector capital. That same principle remains relevant in Africa. Governments need growth. Citizens need jobs and better services. Investors need bankable opportunities, regulatory clarity, and confidence that decisions will move forward.
The bridge between these needs is execution.
This means identifying priority sectors, translating policy into implementable projects, removing bottlenecks, aligning ministries and agencies, tracking progress and solving problems continuously. It also means building local capability from day one, not creating dependency on consultants.
Malaysia’s value to Africa should therefore go beyond trade missions and one-off investments. We should help build investable sectors, institutional capability, execution discipline and long-term partnerships.
From ad hoc projects to a platform approach
Malaysia’s Africa strategy must shift from opportunistic to deliberate.
We should build a platform that brings together Malaysian companies, GLCs, SMEs, financiers, government agencies and diplomatic channels. MATRADE, MIDA, MDEC, Wisma Putra, development finance institutions, Islamic finance players and sector champions should align around a sharper Africa agenda.
The focus should not be “Africa in general”. It should be on priority corridors, priority countries and priority sectors.
For example, East Africa may be a natural entry point for digital systems, halal trade, agro-processing, healthcare and logistics. Botswana and Rwanda offer reform-driven environments. Kenya and Tanzania provide scale and regional access. Nigeria and other West African markets offer consumer depth but require stronger local navigation. Southern Africa offers more familiar institutional structures for infrastructure and services.
This should be treated as a portfolio.
Different markets will serve different purposes: some for trade, some for investment, some for partnerships, and others for long-term platform development. Not every Malaysian company needs to enter in the same way.
Why now
The continent is already home to more than 1.4 billion people. By 2050, the United Nations projects that Africa’s population will approach 2.5 billion, meaning more than one quarter of the world’s population will be African. At the same time, the African Continental Free Trade Area is building a single continental market of 1.4 billion people and about US$3.4 trillion in combined GDP across 55 countries. That is not a marginal opportunity. It is the next major demand centre.
Africa is urbanising, industrialising and reforming. Its young population will drive future consumption, workforce growth and digital adoption. The IMF expects sub-Saharan Africa’s regional growth to remain around 4.3 per cent in 2026, even amid global uncertainty and significant country-level differences.
At the same time, global supply chains are shifting. Trade tensions are rising. Companies are rethinking concentration risk. Governments are seeking new partners beyond traditional blocs. South-South cooperation is no longer a slogan. It is becoming an economic necessity.
Malaysia should not wait until Africa becomes obvious to everyone.
By then, the best partnerships, concessions, distribution networks, local champions and policy relationships may already be taken.
The choice for Malaysia
Breaking into the African region is certainly not a walk in the park. But neither was Malaysia when early investors came here decades ago.
We were once seen as a risky emerging market. Those who entered early, understood the country, and stayed the course benefited from Malaysia’s rise. Today, Malaysian businesses have the opportunity to take the same long view elsewhere.
There is great power in making a differentiated choice.
We can remain comfortable in mature markets and accept slower, incremental growth. Or we can build the capability, partnerships, and courage to enter the next major demand centre early.
Africa is not a side story. It is part of Malaysia’s next outward-growth chapter.
The opportunity is real.
The gap is clear.
The timing is now.
Lab syndication in Botswana for the Botswana Economic Transformation Programme (BETP)
Written by:
Aida Azmi
Joint Managing Director and Partner, PEMANDU Associates
Sean Ong (Co-author)
Executive Vice President at PEMANDU Associates
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Let’s transform together. Contact us at: https://pemandu.org/contact-us/
