The Rand Merchant Bank (RMB), a South African financial institution, a subsidiary of the powerful FirstRand banking group, recently published the annual ranking of the most attractive countries for investors in Africa for the year 2021. The institution ranks the best destinations investment in Africa based on the principles of economic activity and the operating environment of companies taking into account factors such as tax scores or development plans among others.
In the Top 10, Egypt maintains its place at the top of its standings as Morocco overtakes South Africa in second place. We will also note the tumble of Tanzania (eight places) which ends up in 15th place and that of Ethiopia which drops five places to find itself ninth.
On the positive side, we note the return to favor of Tunisia, which from one place joins the fold in the ten best investment destinations in Africa. Two “dragons”, Ivory Coast and Ghana are slowly and surely approaching the top five places. Several African countries, which some qualify as modest and insolent perseverance appear in this ranking thanks to the good management of their national economy like Rwanda (5th) which has proven itself in improving its environment. business or Kenya (4th) which is benefiting from expected growth rates of over 5%, thanks to favorable weather conditions.
Senegal with four places gained carries the top “ten” just behind Maurice 11th. Guinea (26th +7), Mozambique (22nd +8) and Djibouti (34th +10) recorded the most significant gains, with notable advances in certain aspects of their operating environments. Mauritania (32nd +5), Niger (25th +5) are not left out. In the episode that does not advance, it goes backwards and this is the case of Nigeria who, as a good follower of the warmth of the soft stomach, find themselves in eighth place in the same place as in the previous exercise.
In the Chapter of Disappointments, deemed less and less attractive, Algeria was not selected by the ranking of the 10 best African countries to invest in 2021, losing one place further. Suddenly she thinks about in sixteenth place thus confirming that its economy is more than ever in crisis despite the natural resources it contains.
We have to believe that the Algerian regime has nothing to do with the attraction of FDI which otherwise and in which case could overshadow certain pockets of generals and other reigning looters. But that is not the question. Coming back to the podium of this African ranking, Egypt, Morocco and South Africa, the RMB highlights the enormity of the market size of the first ranked country (second after Nigeria in nominal terms) which benefits from circumstances associated with a sophisticated business sector compared to neighboring countries to make Egypt the most attractive investment destination in Africa.
The RMB praises Egyptian attendance at the World Bank, government facilities granted to companies and environmental policy to reduce CO2 emissions. However, it will qualify the risks, as goods, labor and capital markets require further structural reforms to improve Egypt’s competitiveness against comparable economies.
As for the Kingdom, Africa’s fifth largest market, with an expected growth rate of 4% in the medium term, the considerably improved operating environment has served Morocco well since the Arab Spring. Its reintegration into the African Union (AU) and membership in the Economic Community of West African States (ECOWAS) have increased its attractiveness for investment. Morocco remains dependent on Europe, however, through tourism, foreign direct investment (FDI) and remittances.
However, there are no immediate threats to his position in the standings. Or maybe if with the return of South Africa or one of the emerging nations. Tender with Mandela nation the RMB will say South Africa which once led is hampered by depressed growth levels and a lack of structural reforms, but still remains Africa’s hot spot for portfolio investment.
Tackling corruption in high places and in administration and improving governance in state-owned enterprises have boosted market confidence and are expected to translate into higher levels of domestic investment. Except that these foundations need to be examined so that it can remain in the top five over the next five years given a substantial risk to the government’s balance sheet and sovereign rating.