Malta: Bridging Continents and Unlocking Opportunities in Africa and the Middle East

Author: Andrew J. Zammit

According to the United Nations’ World Population Prospects, Africa is projected to experience significant demographic changes over the next 25 years:

• Population Growth: Africa’s population is expected to nearly double by 2050, increasing from approximately 1.5 billion in 2024 (representing about 18.3% of the global population) to around 2.5 billion. The continent’s population has been growing rapidly, with an annual increase of around 2.32%.
• Youthful Demographics: The continent will maintain a predominantly young population, with a substantial proportion under the age of 25 and a median age of 19.2 years. This youthful demographic presents both opportunities and challenges in terms of education, employment, and economic development.
• Urbanization: Urban areas are anticipated to grow rapidly, with projections indicating that by 2050, nearly 60% of Africa’s population will reside in cities, up from about 40% in 2018. This urban shift will necessitate significant investments in infrastructure, housing, and services.
• Fertility Rates: While fertility rates are expected to decline, they will remain higher than the global average. The total fertility rate in Africa is projected to decrease from 4.7 births per woman in 2010-2015 to 3.1 in 2045-2050.
• Life Expectancy: Life expectancy at birth is projected to increase, reaching approximately 68 years by 2045-2050, up from 64 years in 2015-2020. This improvement reflects advancements in healthcare and living conditions.

These demographic trends will have profound implications for Africa’s socio-economic landscape, influencing policies related to education, healthcare, urban planning, and economic development.

EU Financing Initiatives

The European Union (EU) has established comprehensive policies to finance capital projects in Africa, aiming to foster sustainable development, economic growth, and regional integration. These policies are implemented through various initiatives and funding mechanisms:

Global Gateway Africa-Europe Investment Package

Launched in 2021, the Global Gateway Africa-Europe Investment Package is a cornerstone of the EU’s strategy to enhance infrastructure and connectivity across Africa. With a commitment of up to €150 billion, this initiative focuses on:

• Green Transition: Investing in renewable energy and sustainable agriculture to promote environmental sustainability.
• Digital Transformation: Enhancing digital infrastructure to bridge the digital divide and support technological advancement.
• Sustainable Growth and Job Creation: Supporting projects that stimulate economic development and employment opportunities.
• Health Systems Strengthening: Improving healthcare infrastructure and services.
• Education and Training: Investing in educational facilities and vocational training programs.

The financing for this package combines EU budget allocations, contributions from EU Member States, and investments from European financial institutions, aiming to mobilize private sector funding as well.

European Fund for Sustainable Development Plus (EFSD+)

As part of the EU’s Neighbourhood, Development, and International Cooperation Instrument (NDICI), EFSD+ serves as a financial mechanism to support sustainable development in partner countries, including those in Africa. It provides guarantees and blended finance to de-risk investments in sectors such as infrastructure, energy, and digitalization, thereby encouraging private sector participation.

EU-Africa Infrastructure Trust Fund (EU-AITF)

Established in 2007, the EU-AITF offers grant support for infrastructure projects in sub-Saharan Africa. It focuses on sectors like energy, transport, water, and information and communication technology (ICT), aiming to reduce poverty and stimulate economic growth. The fund blends grants with long-term loan financing from development finance institutions, enhancing the viability of large-scale projects.

Horizon Europe’s Africa Initiative

Under the Horizon Europe program, the Africa Initiative allocates funding for research and innovation projects that address common challenges between Europe and Africa. With a budget of approximately €350 million, it targets areas such as public health, green transition, innovation, and capacity building, fostering collaborative efforts to develop sustainable solutions.

External Investment Plan (EIP)

The EU’s External Investment Plan aims to encourage investment in partner countries, including those in Africa, to promote sustainable development and address root causes of migration. With a contribution of €4.5 billion from the EU, the EIP is expected to leverage up to €44 billion in investments by providing guarantees and blending grants with loans, thereby reducing investment risks.

Through these policies and instruments, the EU seeks to support Africa’s development by financing capital projects that align with mutual interests and sustainable development goals.

Malta’s – The Strategic Gateway

Malta, located strategically in the heart of the Mediterranean, has long been a bridge between Europe and North Africa. Its position, combined with a sophisticated regulatory framework, stable political environment within the European Union, and robust economic foundation, makes it an ideal base for investments targeting North Africa, deeper Africa and the Middle East. We’re setting out below our high-level views on why Malta is so well-suited to serve as a strategic base for investments into this region.

Strategic Location and Cultural Affinity with North Africa

Malta’s geographical position is highly advantageous. Situated just 300 kilometers north of Libya and close to other North African countries, Malta offers businesses quick and easy access to North African markets. Its location facilitates shorter travel times, lower logistical costs, and allows investors to maintain proximity to both African and European markets. Malta’s historical and cultural ties with North Africa also play a role in its suitability as a hub for African ventures. The country’s long-standing connections with the Arab world, as well as its Arabic-rooted language, and its deep understanding of African cultures and business norms, allow it to act as a natural intermediary between Europe and Africa.

A Comprehensive Regulatory Framework

Malta’s regulatory framework is modern, transparent, and compliant with European Union standards. As a full EU member since 2004, Malta adheres to rigorous EU regulatory standards, providing investors with a robust, stable, and trustworthy legal environment. This compliance extends across industries, from financial services to telecommunications, technology, construction, and more.

i. Financial Services Regulation

Malta’s financial services sector is one of the most advanced in the EU, supported by the Malta Financial Services Authority (MFSA). The MFSA enforces strict regulations to ensure transparency, mitigate risks, and protect investor interests. Malta is also a member of the Financial Action Task Force (FATF), aligning its anti-money laundering and anti-terrorism financing laws with global standards. For investors interested in Africa’s developing markets, where financial regulations may sometimes be less stringent, Malta offers a trusted base for operations, ensuring that capital flows are secure and regulatory compliance is maintained.

ii. Corporate Law and Taxation

Malta’s corporate laws are designed to encourage foreign investment, with structures that support multi-jurisdictional operations. The tax regime in Malta is competitive for international investors, making it attractive for businesses seeking a cost-effective base. This allows investors looking at North African markets to maximize their returns while benefiting from the protections and advantages of a European jurisdiction. Additionally, Malta has double-taxation treaties with over 70 countries, including many African nations, which facilitates smooth cross-border transactions and minimizes the tax burden on international business activities.

iii. Digital Innovation and Blockchain Regulation

Malta is often referred to as the “Blockchain Island” due to its forward-thinking approach to blockchain and cryptocurrency regulation. In 2018, Malta introduced one of the world’s first comprehensive blockchain regulatory frameworks, setting a strong foundation for fintech and digital asset ventures. With African markets rapidly adopting digital finance solutions, particularly mobile money and digital payments, Malta’s established framework and developed know-how in respect of blockchain and digital assets provides investors with an ideal base for launching innovative fintech solutions into Africa.

Robust Economic Foundation and Resilient Banking System

Malta’s economy has been one of the fastest-growing in the EU, with steady GDP growth, low unemployment, and a strong banking sector. The country’s economic stability, even amid broader European challenges, has been supported by diversified sectors, including tourism, financial services, gaming, and technology. This resilience gives investors confidence in Malta’s economic foundation, providing a secure environment for planning and executing long-term investment strategies.

i. Stable Banking Sector

Malta’s banking sector is highly capitalized, conservative, and secure, adhering to stringent EU banking regulations. This stability is crucial for investors looking to transfer capital to and from African nations, as a robust banking system mitigates the risks associated with currency fluctuations and financial instability in certain African markets. Additionally, Maltese banks are highly adept at handling multi-currency transactions, making cross-border operations smoother and more efficient.

ii. Diversified Economy and Strong Support for Foreign Direct Investment (FDI)

Malta’s government has actively fostered a diverse economy, encouraging investment across sectors like technology, pharmaceuticals, financial services, and aviation. Malta Enterprise, the country’s investment promotion agency, offers a range of incentives, grants, and tax credits to attract foreign direct investment. The combination of a diversified economy and strong FDI support creates a stable business environment, ideal for investors looking to base their African operations in a reliable, low-risk country.

Skilled, Multilingual Workforce

Malta’s workforce is highly educated, skilled, and multilingual. English is an official language in Malta, making it accessible to international investors and easing communication with English-speaking markets in Africa. Many Maltese professionals are also fluent in Italian, French, and Arabic, bridging language gaps with various North African countries. This linguistic advantage, coupled with a well-trained labour force, allows Maltese companies to manage cross-border operations with greater cultural and linguistic sensitivity. For businesses targeting the African market, access to a multilingual workforce can significantly enhance operational efficiency and customer relations.

Strong Bilateral Relations and Diplomatic Ties

Malta has cultivated strong diplomatic and trade relationships with many African nations. The country participates actively in initiatives that foster EU-Africa collaboration and maintains embassies and consulates across North Africa. Malta is also a member of the Commonwealth, giving it unique diplomatic and trade links with several African nations that are also members. These ties enhance Malta’s position as a trusted partner and facilitator of trade and investment into Africa. Malta also engages in numerous development and cooperation projects in Africa, particularly in sectors like education, healthcare, and renewable energy. These initiatives underscore Malta’s commitment to Africa’s sustainable development and solidify its role as a constructive partner in the region’s growth.

Innovation and Sustainability Initiatives

As African nations seek sustainable growth, Malta’s expertise in renewable energy and environmental sustainability makes it an ideal partner. Malta has invested significantly in renewable energy, waste management, and water conservation—areas of increasing importance in many African countries facing environmental challenges. Investors interested in sustainable projects, especially in North Africa, can benefit from Malta’s experience and resources. Additionally, the Maltese government’s emphasis on innovation, particularly in technology and sustainability, aligns well with Africa’s growing emphasis on green development. Malta’s strengths in solar energy, for example, could be especially relevant for North African countries with ample sunlight and rising energy needs.

Gateway to EU Funding and Market Access

By operating out of Malta, investors gain direct access to the EU’s extensive financial and development resources, such as the European Investment Bank (EIB) and the European Development Fund (EDF), which actively support projects in Africa. Malta’s EU membership thus opens doors to a wide array of funding sources for companies seeking to expand into African markets. Furthermore, by setting up in Malta, businesses can take advantage of the EU’s single market, benefitting from free movement of goods, services, and capital across 27 member states. This allows for easy reallocation of resources between Africa and Europe, optimizing logistics and market entry strategies.

Conclusion

Malta emerges as an unrivalled strategic hub for investment into North Africa, the broader African continent, and the Middle East. Its prime location, comprehensive regulatory framework, resilient economy, and robust banking infrastructure offer investors a secure, accessible, and well-supported platform for launching successful ventures across Africa. With a skilled and multilingual workforce, strong diplomatic connections, and a forward-thinking commitment to sustainability, Malta provides a cost-effective and dependable environment for businesses aiming to tap into Africa’s rapidly expanding markets—particularly at this pivotal moment of anticipated explosive development driven by the continent’s soaring population growth.

Are you interested in exploring how Malta’s strategic business advantages can support your international expansion into Africa and the Middle East?

Contact us today at info@gvzh.mt for a preliminary consultation, and take the first step toward unlocking the vast opportunities these dynamic regions have to offer.