AFRICAN BUZZ
“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 in
one or more aspects of our methodology. 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.
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 our rankings.
8. Nigeria: Nigeria retains its top ten 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.
Tanzania’s fall from grace has reshuffled the top ten investment
destinations, with Tunisia returning to the fold at number ten 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.
RMB’s top 10 rankings are:
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 Foreign Direct Investment (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
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10. Tunisia: Tunisia re-enters within the top ten 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.
African Mining
African Mining March 2020
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