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By James Anyanzwa

Published February 5, 2019

 

Kenya, Rwanda and Tanzania will be among Africa’s most attractive investment destinations in 2019, according to a new study by South Africa’s Rand Merchant Bank (RMB).

The RMB Investment Attractiveness index looks at countries’ economic and operating environments to assess their potential to attract investment.

According to the report, Where to Invest in Africa 2019, Africa’s overall operating environment has improved only marginally since 2017 due to difficulties in getting financing, corruption, inadequate infrastructure and weak governance.

In East Africa, the report ranks Kenya as the most attractive, attributed to the political reconciliation after the disputed 2017 presidential election and the country’s sustained consumer demand.

Second placed Rwanda, rated one of Africa’s fastest growing economies, has more than doubled the efficiency of its business environment in less than a decade with the government investing heavily in domestic industries.

In ranking Tanzania third in the region, the report cites government tax breaks, development of special economic zones, investment in public infrastructure and growth in the services sector as incentives for foreign investors.

In the larger Eastern Africa, South Sudan is the worst rated country to do business in on the continent, followed by the Democratic Republic of Congo and Burundi.

South Sudan’s business environment has deteriorated the most, as its political instability prevents the economy from developing.

A political peace deal in Juba notwithstanding, it will be a while before investor confidence recovers to the post-Independence, pre-war levels.

According to the report, Ethiopia, which is Africa’s fastest-growing economy, has successfully managed to nurture its comparative advantage, particularly in agriculture and manufacturing, and its demand for goods and services is rising significantly given a market size of about 100 million people.

Most attractive destinations

Continent-wide, Egypt has retained the top spot as the most attractive investment destination for the second year in a row, helped by its expanding consumer market, increasing availability of hard currency, exchange rate stability, a diversified economy and steady improvement in business environment, particularly investment-related legal reforms.

It is followed by South Africa, Morocco and Ethiopia, with Kenya, Rwanda and Tanzania in fifth, sixth and seventh place respectively.

Nigeria, Ghana and Côte d’Ivoire complete the top 10 positions.

Egypt, which is Africa’s largest recipient of foreign direct investment, has the largest consumer market in the Middle East and North Africa.

“Egypt’s economic activity scoring continues to dominate that of South Africa, as the latter's growth forecasts and the size of its economy are inferior to Egypt’s. This has weighed down its investment scoring,” says the report.

In 2018, Egypt, Nigeria and South Africa were the three largest markets in Africa in terms of GDP, and they are expected to maintain these positions.

Together, the three markets make up almost 50 per cent of Africa’s estimated $7 trillion market...Continue reading

Source: The East African