Rand Merchant Bank (RMB) has released its 2014/2015 investment attractiveness score for Africa and these are the highlights:
The aggregate investment attractiveness score for Africa deteriorated over the past year for only the second time in the last decade (the previous fall was in 2009 on account of the financial crisis). The worsening in our aggregate investment score is partly a lagged result of the troubles in North Africa but, in all, 22 countries’ investment attractiveness scores decreased between 2013 and 2014.
South Africa remains Africa’s foremost investment destination and has, in fact, extended its lead despite a GDP revision that transformed Nigeria into Africa’s largest economy.
The remaining top 10 are, in order, Nigeria, Ghana, Morocco, Tunisia, Egypt, Ethiopia, Algeria, Rwanda, and Tanzania. Egypt has slipped three places while Libya has completely dropped out of the top 10. Algeria reenters the top 10 after a three-year break, and Rwanda enters the fold for the first time.
2014 was a less favourable year for Africa’s investment attractiveness ratings. Not only did the continent’s overall investment attractiveness deteriorate, but 22 countries received lower scores. This comes after a decade of almost continuous improvement, which was only briefly interrupted by the global financial crisis. A small part of the deterioration seems temporary — due, for instance, to the political upheaval in North Africa. However, the outcome emphasises that the continent still has a long way to go in terms of reforms if the recent economic boom is to be sustained.
The fall in Africa’s attractiveness score is attributed to a worsening in the business environments of several economies. Twenty-one countries’ operating environment indices declined between 2013 and 2014, with sharp falls observed in Libya, São Tomé and Príncipe, and Egypt.
Notable improvements were seen in Niger, the DRC, Lesotho, Swaziland, Algeria, and Rwanda’s rankings, while the Congo, Mauritania, São Tomé and Príncipe, Egypt, and Libya fell several places lower.
African economies are expected to continue to realise rapid growth rates. The IMF’s five-year real GDP growth forecast for the continent is 5.2%, marginally lower than the 5.3% that was projected last year, but still an exceptionally good number. Bursting with growth-laden economies, East and West Africa are forecast to grow at an average 6.3% and 6.4% between 2014 and 2018. But, East Africa could surpass this forecast if oil and gas activities come to fruition sooner than anticipated.
While Africa has become a hot new destination for investment, many countries on the continent remain unreformed and unattractive: the bottom six countries in our world rankings are in Africa.
As far as the global rankings are concerned, the US has regained the top spot from China, a position it surrendered after the financial crisis. This represents an improvement in the US economic outlook and an expected slowdown in Chinese growth rates.
Key highlights of this year’s report
Our aggregate investment attractiveness score for Africa deteriorated over the past year for only the second time in the last decade (the previous fall was in 2009 on account of the financial crisis). The worsening in our aggregate investment score is partly a lagged result of the troubles in North Africa but, in all, 22 countries’ investment attractiveness scores decreased between 2013 and 2014.
South Africa remains Africa’s foremost investment destination and has, in fact, extended its lead despite a GDP revision that transformed Nigeria into Africa’s largest economy.
The remaining top 10 are, in order, Nigeria, Ghana, Morocco, Tunisia, Egypt, Ethiopia, Algeria, Rwanda, and Tanzania. Egypt has slipped three places while Libya has completely dropped out of the top 10. Algeria reenters the top 10 after a three-year break, and Rwanda enters the fold for the first time.
2014 was a less favourable year for Africa’s investment attractiveness ratings. Not only did the continent’s overall investment attractiveness deteriorate, but 22 countries received lower scores. This comes after a decade of almost continuous improvement, which was only briefly interrupted by the global financial crisis. A small part of the deterioration seems temporary — due, for instance, to the political upheaval in North Africa. However, the outcome emphasises that the continent still has a long way to go in terms of reforms if the recent economic boom is to be sustained.
The fall in Africa’s attractiveness score is attributed to a worsening in the business environments of several economies. Twenty-one countries’ operating environment indices declined between 2013 and 2014, with sharp falls observed in Libya, São Tomé and Príncipe, and Egypt.
Notable improvements were seen in Niger, the DRC, Lesotho, Swaziland, Algeria, and Rwanda’s rankings, while the Congo, Mauritania, São Tomé and Príncipe, Egypt, and Libya fell several places lower.
African economies are expected to continue to realise rapid growth rates. The IMF’s five-year real GDP growth forecast for the continent is 5.2%, marginally lower than the 5.3% that was projected last year, but still an exceptionally good number. Bursting with growth-laden economies, East and West Africa are forecast to grow at an average 6.3% and 6.4% between 2014 and 2018. But, East Africa could surpass this forecast if oil and gas activities come to fruition sooner than anticipated.
While Africa has become a hot new destination for investment, many countries on the continent remain unreformed and unattractive: the bottom six countries in our world rankings are in Africa.
As far as the global rankings are concerned, the US has regained the top spot from China, a position it surrendered after the financial crisis. This represents an improvement in the US economic outlook and an expected slowdown in Chinese growth rates.
Table 1: RMB’s 2014/15 rankings of the most attractive countries for investment in Africa1 (the higher the score, the better)
2014 rank Country Score World rank 2013 rank
1 South Africa 5.72 35 1
2 Nigeria 5.62 43 2
3 Ghana 5.45 49 4
4 Morocco 5.45 50 5
5 Tunisia 5.28 58 6
6 Egypt 5.25 59 3
7 Ethiopia 5.24 60 8
8 Algeria 5.07 67 12
9 Rwanda 5.06 70 14
10 Tanzania 5.05 71 9
11 Kenya 5.04 72 10
12 Botswana 5.00 75 11
13 Uganda 4.91 79 15
14 Zambia 4.88 86 13
15 Mauritius 4.84 88 16
16 Côte d’Ivoire 4.69 96 17
17 Mozambique 4.68 97 18
18 Angola 4.63 100 20
19 Libya 4.59 103 7
20 Burkina Faso 4.55 107 21
21 Gabon 4.51 111 22
22 – Cameroon 4.48 114 19
23 – Namibia 4.44 116 23
24 Senegal 4.30 122 24
25 Niger 4.24 127 34
26 DRC 4.23 128 35
27 Madagascar 4.18 131 25
28 Malawi 4.12 132 27
29 Mali 4.09 135 26
30 Guinea 4.09 136 29
31 Sierra Leone 4.05 138 28
32 Benin 4.05 139 31
33 – Chad 3.95 140 33
34 Sudan 3.84 145 36
35 Congo 3.84 146 30
36 Mauritania 3.82 147 32
37 – Togo 3.58 152 37
38 Zimbabwe 3.48 154 40
39 Lesotho 3.46 155 42
40 Swaziland 3.44 156 44
41 – Burundi 3.41 157 41
42 Gambia 3.33 158 39
43 – Liberia 3.25 161 43
44 n/a South Sudan2 3.14 164 n/a
45 Seychelles 3.07 165 46
46 Cabo Verde 3.02 168 45
47 Djibouti 2.92 174 48
48 Comoros 2.67 178 50
49 São Tomé and Príncipe 2.65 179 38
50 Eritrea 2.64 180 51
51 CAR 2.56 181 47
52 Guinea-Bissau 2.51 182 49
53 Equatorial Guinea 2.09 183 52
Note:
Somalia had insufficient data to be rated.
South Sudan was not rated in 2013.
Source: RMB Global Markets
