Although not as with exciting pace as once captured in international news headlines, for investors with corporate and institutional interest in Africa, the continent still holds a treasure chest of opportunities waiting to be unearthed according to a new report.
The report, "Where to invest in Africa, a guide to Corporate Investment" by the Rand Merchant Bank says despite a macroeconomic backdrop, investment opportunities in Africa are plentiful but require meticulous planning and fortitude.
The sixth and latest edition themed "Back to the Future" evaluates Africa past progress, present predisposition and future prospects.
According to the report, the 7% economic growth rates foreseen few years back is no more as global events and endogenous shocks have led to uneven rates across the continent but even with whales of challenges, Africa is still rising.
Additionally, the reports says African governments have realized diversification is necessary to foster growth. However, transformation cannot be achieved in insolation as structural reformation and greater private participation are crucial in unlocking Africa potential.
The hopefulness the reports says, is due to the fact that Africa has the ability to stave off global macroeconomics forces and grow from within. Key sectors of opportunity were named as Finance, infrastructure, resources and consumption.
The RMB’s investment attractiveness rankings by RMB report ranks country by economic activity against relative ease of doing business.
Below is RMB’s most attractive investments destinations in Africa ranked one to ten.
1. South Africa
Despite a persistent weakening in its score, South Africa for a second year running held unto its number one position as the most attractive destination in Africa reinforced by strong governance relative to its African peers. The country remains a stronghold of institutional integrity and continues to boast one of the best operating environments in Africa. A wavering growth outlook and uncertain business environment however, in few coming years could eliminate South Africa from top investment score rankings.
Second as the leading investment destination in Africa for a row, Egypt is tipped by the report to beat South Africa to first position if it succeeds in consolidating the economic gains accumulated in the aftermath of the Arab Spring. However, the country’s operating environment could be an inhibiting factor considering that it lags South Africa in all aspects of governance
Morocco has sustained its number 3 from 2015 rankings due to its solid economic growth, favorable geographic positioning, sturdy infrastructure, strong regulatory policies and a stable political setting
Ghana remains within an inch of the top three, its the most attractive investment destination in West Africa. Despite a myriad of economic challenges, the country labors on as it slowly rebuilds confidence in its processes and policies under the watchful eye of the IMF.
Kenya’s relative diverse economy, pro-market policies, and brisk growth in consumer spending has attracted investors and helped the country jumped from 10th place to fifth in the rankings. The country’s exceptional progress has surpassed both in Ethiopia and Tanzania which in 2015 were ranked 6th and 9th respectively.
Depressing economic growth outlook and weak operating environment is responsible for Nigeria one drop slot sixth, a 2011 position it’s reliving. Despite its many challenges, the West African giant is still regarded as a viable long-term investment destination but will be forced to endure painful structural adjustments over the next few years to safeguard its prospects.
With its young and vibrant population, low unit labor costs and thriving manufacture sector that attracts foreign investors, the report tips Ethiopia to beat Nigeria in 2017. And even with the regulatory challenges in establishing operations locally, the opportunity to participate in this budding economy cannot be overlooked.
8. Côte d’Ivoire
The world’s cocoa producer and unsung West Africa hero Cote d’Ivoire makes a debut at number eight. After years of political paralysis, the country’s booming economy, emerging middle class, robust infrastructure development and improved business environment has elevated it to top ten attracting investment destinations in Africa.
For years, Tanzania could only dream of a top ten position. However in 2015, her dreams finally came true. In this year report, the country has maintained its number nine slot. The report attributes this to the new political setting led by Mafunguli that emphases on industrialization and improved productivity. However, it also says the protectionist tendencies could undermine the government’s pro-business rhetoric.
Ranked eighth in 2015, Algeria has dropped two spots to ten. High reserves and low debt levels have helped to cushion the blow of low oil prices. The RMB’s Global Markets Survey carried out in June 2016 says there is a desperate need to implement reforms to diversify the economy away from the hydrocarbon sector.
Outside top 10, some countries received honorable mention for their advancements in the rankings. Senegal was up five spots to 17 from position 22, while Cameroon was three spots to 20 and Togo three spots to 35. Others were Swaziland which up four spots to 36 and Sierra Leone four spots to 38 from 42 in 2015 report.