• Thursday, March 28, 2024
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Côte d’Ivoire, Ghana overtake Nigeria as investment destination 2021 – RMB

Insecurity, poor policy implementation key challenges to Nigeria’s growth – ICSAN

Nigeria, Africa’s largest economy, has been overtaken by Côte d’Ivoir and Ghana in where to invest in Africa, ranking 14 out of 54, according to the latest report by Rand Merchant Bank.

The West Africa’s biggest oil producer has maintained the eight position in investment attractiveness ranking in 2018 and 2019 but was missing among the top 10 in the 2021 edition after being overtaken by Côte d’Ivoir, which ranked 8th position.

This was largely driven by the impact of Covid-19 pandemic, insecurity and poor operating environment, said analysts.

“One of the impacts of the pandemic was the fact that, during the course of 2020, oil prices tanked across the board. Over the course of the next few years, we should see some recovery in this sector. I mention this because one of the economies therefore impacted was Nigeria, whose export earnings had to take quite a bit of a knock given the fact that production numbers had to be cut in view of what was taking place across the wider market,” said Daniel Kavishe, RMB Africa Economist and author of the Where to Invest in Africa 2021 report.

Over the years, RMB ranked various African markets based on the tenets of economic activity and business operating environment. The rankings have served as a strong identifier of suitable investment destinations.

Primarily tailored towards investors who are targeting real assets in an economy or looking to expand businesses that rely on physical infrastructure (such as retail stores), the rankings assist in building a strong basis of investment. The year 2020 added a layer of sophistication to the investment process.

Read Also: Lagos tops Nigeria’s investment destination with $8.304bn capital inflow

“Further to our traditional indicators, we’ve argued that there is a growing need for corporates and investors to be aware of the state of the government finances in the country or countries in which they operate,” the report stated.

In terms of operating environment, Nigeria scored (30 out of 54), it scored (2 out of 54) in GDP ($1.04 trillion). Under GDP/Capita (Market prices), Nigeria scored (18 out of 54), the country scored (46 out of 54) in GDP (Average annual growth 2019-2021), and under RMB Investment attractiveness, it scored (14 out of 54).

Olalekan Aworinde, senior lecturer, department of economics, Pan-Atlantic University, Lagos, says it has to do with a lot of issues in Nigeria, including political instability, insecurity and tax system.

According to Aworinde, nobody would like to invest in an environment where there is a high level of uncertainty. The lecturer sees double taxation as not a good indicator, and therefore, one of the reasons why people would not want to come to Nigeria for the purpose of investment.

Kavishe said the Nigerian economy, however, still remains one of the larger economies across the continent. “We think that over the next few years, while growth will remain relatively muted, likely growing by just over 2 percent we have the opportunity to expand in other key sectors that weren’t necessarily explored previously,” he said.

According to him a big focus for the Nigerian market from an infrastructure development perspective will be, of course, the Dangote refinery. But in other areas as well, there should be focus for them to improve their export earnings basis.

“They have secured, they have managed to increase, the investments across gold production, which we think will be key for this market over the next few years. And with support of both multilateral and bilateral funding, we think that this economy will have a stronger fiscal footing over the next two to three years,” he said further.

In the where to invest in Africa ranking, Egypt was placed first and followed by Morocco and South Africa in the second and third place respectively.

Rwanda, Botswana and Ghana followed in the pecking order while Mauritius, Cote d’Ivoire, Kenya and Tanzania made up the remaining places.

In the same ranking for 2020, Nigeria placed 7th but this year the country is completely missing from the top ten, a mark of how the investment climate in Africa’s most populous country had deteriorated in 12 months.