Quantum Global Research Lab — Quantum Global’s independent research arm, has recently released its 2018 Africa Investment Index, in which African countries are ranked based on their investment potential.
The Africa Investment Index, is a tool that measures multidimensional concepts for assessing the investment attractiveness of African countries over time. This annual index helps in creating an image of how attractive African countries are for investments It also guides policymakers in setting or reviewing policies to better attract Foreign Direct Investments, FDI, benchmarking and monitoring their country’s performance relative to peers. According to the report, the Index is base on 6 criteria: growth paramaters (domestic investment, size of the economy, economic growth); risk factors (exchange rate risk, import cover, external debt, current account ratio); liquidity (real interest rate, excess money supply); business environment (ease of doing business, trade openness); population; and a measure of social capital using the Facebook penetration rate.
Here are the top 10 investment destinations in Africa:
1. Morocco
2. Egypt
3. Algeria
4. Botswana
5. Cote D’ Ivore
6. South Africa
7. Ethiopia
8. Zambia
9. Kenya
10. Senegal
According to recent data by the Moroccan Exchange Control, Morocco attracted nearly $2.57 billion of foreign direct investment (FDI) in 2017, up by 12 percent compared to 2016. The country is being recognised as one of the best emerging markets for overseas investment.
Egypt has a low exchange rate risk, a strong open economy and domestic investment activity. The report states that “FDI flows into equity remain strong,”. Interestingly, while South Africa is in the top 3 for the strongest African economies, it ranked as number 6 on the list. While they did not make the list, Angola
and Nigeria received mentions for their strong improvement. While Nigeria’s economic recovery as a result of higher oil prices has been commended, Angola has shown the strongest improvement out of all 54 African countries due to its economic recovery.
“In spite of the improvements to oil production and prices, African economies are turning attention towards diversification to stimulate industrial development and to attract investments in non-oil strategic sectors,” said Mthuli Ncube, Managing Director, Quantum Global Research Lab. “Morocco has been consistent in attracting an inward flow of foreign capital, specifically in banking, tourism and energy sector and through the development of industry.”
According to AII’s data, the top five African Investment destination attracted an overall FDI of $12.8 billion in 2016. Cote D’Ivoire, ranks fifth and scores well in liquidity, and risk factors such as real interest rate, exchange rate risk and current account ratio. Algeria and Botswana rank third and fourth respectively, also scoring well in risk factors as well as business environment.