Nigeria pips Egypt
Nigeria is fast emerging as the new mecca for corporate investors, threatening to overtake South Africa as the most preferred corporate investment destination in Africa, according to an annual survey by South-Africa based Rand Merchant Bank (RMB).
The third such survey by the leading African investment bank, the Where to Invest in Africa: A guide to corporate investment report places Nigeria second only to its southern neighbour in the African continent. Last year, South Africa had bagged first place yet again, while Nigeria had come third.
The report gives clear indications of a persistent improvement in Nigeria’s economy. With a yearly growth forecast of 6%-7% for the next five years, the West African powerhouse looks all geared up to give its southern neighbour a run for its money, the latter barely looking set to achieve GDP growth of 2%-3% over the next five years. The World Economic Forum (WEF) pegs Nigeria’s current GDP at $268.7bn. With impending revisions to gross domestic product (GDP) under way, the size of the former’s economy may soon be adjusted upwards as much as 40%. So, Nigeria is likely to come within touching distance of South Africa’s GDP of $384bn and might just overtake its southern neighbor over the next two to four years, or even sooner, depending on the West African country’s rate of economic growth.
While the top 10 African countries remain the same as last year, the survey finds that Nigeria and Egypt have switched places. This year, Egypt has yielded second rank to Nigeria but clings to third position. The RMB has clarified that the scores were finalised before the recent political disarray in Egypt and Libya, however they continue to feature in the list as the research is meant to inform long-term investors. Also, the researcher and co-author of the guide, Celeste Fauconnier, added that Egypt’s rebound would be made easier by its sizeable market and population, and decent operating environment with a highly diversified economy.
Ghana, Morocco, Tunisia, Libya, Ethiopia, Tanzania and Kenya are ranked from fourth place to 10th. Another stellar rise has been Ghana’s, which has moved up to fourth place from 10th last year.
Besides its main ranking, RMB also determines whether regional affiliation improves an economy’s attractiveness. On the supplementary ranking scale, Mauritius emerges as the primary investment destination in Africa based on its access to broader markets within the Southern African Development Community (SADC) and Common Market for Eastern and Southern Africa (COMESA). Rwanda’s favourable macroeconomic scores add to an already exceptional operating environment, pushing it up to the number two spot. South Africa is ranked third on RMB’s regional parameters, highlighting its importance as a gateway into Africa.
On the whole, of the 52 countries ranked in the report, 42 showed an improvement in their investment attractiveness. Some of the most troubled countries on the continent, notably Sao Tome and Principe, Gabon, Cameroon, Sierra Leone, Congo, Mauritania and Liberia, showed an impressive rise in rankings. However, Algeria, Angola and Equatorial Guinea, failed to shine.
RMB uses three main factors to determine the investment attractiveness of each country in its report: market size (GDP); economic growth (GDP growth forecasts over the next five years); and an operating environment index.
The operating environment is assessed using the WEF global competitiveness index, the World Bank’s Doing Business report, the Heritage Foundation’s index of economic freedom and Transparency International’s corruption perceptions index.
Last week, Mauritius wrested sub-Saharan Africa’s top spot from South Africa on the WEF global competitiveness index, striding up 9 places to take the 45th position in the rankings even as South Africa fell one place from 52nd to 53rd out of the 148 countries comprising the list. Nigeria is ranked 120th.
Image: A panoramic view of Lagos, the commercial capital of Nigeria, Source:Wikipedia
Source: Business Day, InvestSA Magazine, DevelopingReport