Entrepreneurship Zone: 30 September 2019: Where to invest in Africa? Ranking the top 10 countries

Mon Sep 30 08:13:12 CAT 2019

 <mailto:info at bulls.co.zw> 

Nairobi, Kenya

The latest edition of Rand Merchant Bank’s Where to Invest in Africa report
assesses each African economy’s investment potential, by overlaying
macroeconomic fundamentals with the practicalities of doing business on the
continent.

“After nine years of publishing, we never fail to be both pleased and
surprised by the extent of improvement in countries that are not necessarily
perceived as strong investment destinations,” says co-author and head of RMB
Global Markets Research, Nema Ramkhelawan-Bhana. This year, Guinea,
Mozambique and Djibouti recorded the strongest gains in the rankings, with
notable advancements in their operating environments.

The rankings are as instructive on the downside, identifying countries that
have either stagnated or outright deteriorated. South Africa, Ethiopia and
Tanzania are among the more prominent countries to have taken a tumble. A
deterioration in the ease of doing business has contributed to their
relative underperformance and, in addition, South Africa is enduring a
cyclical downturn.

Tanzania’s fall from grace has reshuffled the top 10 investment
destinations, with Tunisia returning to the fold at number 10 while Côte
d’Ivoire and Ghana edge ever-closer to the top five. North Africa remains
dominant with Morocco displacing South Africa in the rankings, rising to
second place.

There is an even split of countries from the north, east and west within the
top 10 rankings, with only South Africa representing the southern tip of the
continent, as a result of its dominance in terms of market size.

1. Egypt: The enormity of the market paired with a sophisticated business
sector relative to other countries makes Egypt the most attractive
investment destination in Africa. The improvement in Egypt’s business
environment, facilitated through government programmes, combined with the
progressive increase in investment from the private sector has enhanced
economic growth and assisted in repositioning Egypt on the global investment
map.

2. Morocco: While only Africa’s fifth-largest market, Morocco’s expected
growth rate of 4% over the medium term and its greatly-enhanced operating
environment has served the country well since the Arab Spring. Its
reintegration into the African Union and accession to the Economic Community
of West African States (ECOWAS) have enhanced its investment appeal.

3. South Africa: South Africa has slipped another place in this year’s
rankings, stymied by depressed levels of growth and a lack of structural
reform. Yet it remains Africa’s hotspot for portfolio investment. With many
countries facing severe liquidity constraints, South Africa’s financial
markets and level of financial inclusion are still a cut above the rest.

4. Kenya: The above 5% expected growth rates, helped by favourable weather
and political reconciliation after 2017’s disputed elections, has propelled
Kenya one spot higher than 2019. The economy benefits from diversity as well
as a sustained expansion in consumer demand, urbanisation, East African
Community (EAC) integration, structural reforms and investment in
infrastructure, including an oil pipeline, railways, ports and power
generation.

5. Rwanda: Rwanda has the second-best business environment in Africa.
According to the World Bank’s operating environment scoring, the country has
more than doubled the efficiency of its business environment in less than a
decade. The government has also invested heavily into its domestic
industries, while FDI has increased over the same period, pushing Rwanda to
being one of the five fastest-growing economies on the continent.

6. Ghana: The growth outlook is strong, concentrated around the oil and gas
sector. Non-oil growth will pick up again, supported by pro-business reforms
and a steady improvement in power supply. Political stability will remain
underpinned by Ghana’s strong democratic credentials. Regardless of a recent
deterioration in its operating environment rankings, Ghana remains one of
the easier business environments in Africa.

7. Côte d’Ivoire: Côte d’Ivoire is one of the more diversified economies in
francophone Africa. Its strong growth rates are supported by the
government’s pro-business reforms and a relatively stable political context.
Large infrastructure projects, particularly in transport and energy
(financed by foreign investment, aid inflows and the government) also
support the country’s strong position in the rankings.

8. Nigeria: Nigeria retains its top 10 ranking due to improved
macroeconomics, supported by recovering oil prices and production. As the
largest economy in Africa in nominal terms, the possibility for investment
cannot be overlooked; and with the largest population on the continent,
domestic demand continues to rise. Resources and favourable demographics are
attracting strong flow of FDI. The liquidity crunch has subsided since 2017
as commodity prices have recovered and changes in FX regulations have been
implemented.

9. Ethiopia: Ethiopia is the fastest-growing economy on the continent. With
a population of almost 100 million people, demand for goods and services is
rising significantly. The prohibition of foreign ownership in key sectors is
still a constraint for investment, but this is slowly changing. The
government has announced shake-ups across industries, including plans to
open up the once closely-guarded telecommunications and power monopolies.

10. Tunisia: Tunisia re-enters within the top 10 supported by a reasonable
market size and favourable operating environment. The government’s
encouragement of foreign investment, through its new simplified investment
code, has made the country increasingly attractive to multinational
manufacturers.--Howwemadeitinafrica

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