Egypt has come out on top with Morocco and South Africa the second and third most robust markets for investment, according to the latest Rand Merchant Bank report titled ‘Where to Invest in Africa 2021’.
Notably, smaller nations like Rwanda and Botswana moved up the rankings from position five and thirteen in 2020, to position four and five respectively in the latest index.
The report highlights a trend amongst investors willing to bypass traditional markets in Africa in favour of smaller states with economic hygiene.
Rwanda, as seen in a separate report published by PwC this year, has steadily climbed and maintained a high ranking in the ‘ease of doing business’ segment. The country currently ranks second on the continent after Mauritius in that report and is also one of only two countries in Africa to feature amongst the top 50 countries listed by PwC.
According to RMB, each state’s handling of the Covid-19 pandemic has emerged as an important indicator of a market’s ability to absorb external and internal shocks.
“A government’s ability to aid its economy in a period of deep crisis, either through direct fiscal stimulus or an ability to capitalise on its large distribution networks, has become crucial,” its report notes.
“We have therefore included a fiscal score as an additional pillar in our rankings based on available data. This indicator aims to score governments’ fiscal positions and provide a basis from which an investor can understand a specific jurisdiction.”
According to the author, RMB Africa Economist Daniel Kavishe, a “new world” calls for a new approach to the publication and this year’s report assesses the extent of the pandemic’s impact by sketching the landscape of the continent pre-Covid-19, and then painting a picture of both its actual and potential outcomes through and post, pandemic.
Where previous editions positively projected Africa’s prospects, discerned through reliable and readily available data, Covid-19 has muddied the analytical waters and compelled the team to adapt their methodology.
bThe approach required an extra layer of sophistication. Says Kavishe: “We created a new set of rankings that incorporated some of the unavoidable Covid-19-induced challenges, of which the operating environment score was one.”
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