Nigeria has retained 8th spot for the second consecutive time as having one of the most attractive investment destinations in the African continent, according to the latest report by Rand Merchant bank on “where to invest in Africa 2020”.
This puts Africa’s largest economies behind other African countries including Egypt, Kenya and five others in terms of investment destinations.
The report which delves deeper into the traditional and alternative sectors that are driving African economies to reach ever-higher levels of economic growth analysed 54 African economies according to their investment attractiveness alongside notable advancements in their operating environments.
Nema Ramkh elawanBhana, Co-author and Head of RMB Global markets Research, said “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 investments destination”.
Egypt led the pack of African countries, to take the number one spot on the list as being the most attractive country for investment destination, a position it has held for three straight years since 2017.
Morocco came next, displacing South Africa, to take the second step while South Africa came third, the report said.
Read also: 5 African countries you can visit with your Nigerian Passport For Free
According to RMB, Egypt retained its position due to investment-related legal reforms that have caused strong improvement in the country’s business environment. Such reforms include the availability of increased availability of hard currency and greater exchange-rate stability and diversification policy that has led to a massive influx of Foreign Direct Investment (FDI). The country is also forecast to post growth above 4 per cent.
The country is however faced with potential risk such as the depreciation of the Egyptian pound since its 2016 flotation, rendering hard-currency debt-servicing more difficult
For Morocco, the country has witnessed investment drivers including enhanced operating environment since the “Arab Spring”; enhanced investment appeal through its reintegration into the AU and accession to the Economic Community of West African States (ECOWAS).
A potential risk for the country includes its heavy dependence on European tourism, FDI and remittance inflows while the possible risk for the South African economy include subdued economic growth which might hinder the country’s overall scoring
Kenya, Rwanda, Ghana and Cote Ivoire stood 4th, 5th, 6th and 7th respectively while Ethiopia and Tunisia were ranked 9th and 10th, behind Nigeria.
Nigeria slipped a step down the 6th spot in 2016 from 5th ranking in 2015, after its economy entered five quarters of negative contraction, following a collapse in crude oil prices that started in 2014.
In 2017, the West African nation fell further below the ranking coming number 13, as the economy struggles to pick the remains from the recession that brought economic activities to its knees.
As economic activities continue to rebound due to an uptick in crude oil prices and calmness in the oil-producing region of the state, Nigeria began to move up the in the investment ladder.
In 2018, Nigeria was ranked 8th, with a score of 5.52, higher than the score of 5.32 in the previous year.
“Nigeria jumped back into the top 10 due to improved macroeconomics, supported by recovering oil prices and production; second-largest market in Africa driven by a large population, domestic demand continues to rise, resources and favourable demographics attracting a strong flow of FDI,” according to RMB
“Also, the country has witnessed easing liquidity crunch since 2017 on the back of a recovery in commodity prices and changes in FX regulations”.
However growth in the economy continues to be constrained by weak policy environment and dire infrastructure and exposure to global oil-price falls and disruptions to output resulting from instability in oil-producing regions, RMB noted.
Africa’s largest economy appears to be regaining investors’ confidence in the investing landscape. Last week, the World Bank named Nigeria as one of the 20 countries that have recorded significant improvement in the ease of doing business ranking, set to be released in October this year.
According to the Bank, Nigeria made starting a business easier by operationalizing a new electronic platform that integrates the tax authority and the Corporate Affairs Commission (CAC).
Also, in Lagos, its commercial city, the World Bank noted that land administration was made more transparent following the digitisation of cadastral plans in a geographic information system while digital copies of cadastral plans are now easily obtainable.
“The CAC also upgraded its name reservation platform and, in Kano, there is now an electronic platform for registering business premises online, eliminating the need to appear in person,” World Bank said in the report Friday.
World Bank also noted that Nigeria improved in making electricity easier by allowing certified engineers to conduct inspections for new connections while initiatives also made commercial litigation of smaller cases more efficient.
