Africa has remained a challenging market for investment with risks and concerns. Botswana and South Africa have the lowest risk rating and hence rank top among the best countries to invest in Africa, according to the risk rating report compiled by business intelligence experts ABiQ.
The rankings are based on a comparison between all African countries and took into consideration factors like economic, political, financial, health and security as these can affect investment and the ease of doing business in a country. Africa has remained a challenging market for investment with risks and concerns around political instability, civil war, lack of transparency, limited capacity to enforce the rule of law, corruption, volatile currency fluctuations and regional contagion heightening uncertainty of the business environment.
However, in recent years, African countries have made great efforts to improve their investment climate, while GDP growth and foreign direct investment (FDI) flows have registered a positive trend. Countries with the best ranking have been taking measures to diversify their economy which will attract more FDIs.
The governments have also worked to create a favourable environment for its investors while making it easy to do business. Based on the latest rankings, South Africa ranks 84th on ease of doing business while Botswana stands at 87. What gives Botswana an edge over other countries in Africa is the reputation of being one of the least corrupt countries in the world, which has made investment secure in the country.
For investors, there are many advantages to entering these low-risk countries. However, due to the COVID-19 pandemic, everybody has been cautious. The pandemic has caused havoc in the region as strict lockdown rules have affected trade, which is the largest economic driver. These countries did not have large fiscal reserves before the pandemic and had to resort to emergency funding by the IMF, World Bank and the like. However, in recent days, many counties have eased their lockdowns and life is gradually returning to some form of normality.
“Covid-19 might have shaken the confidence of potential investors, but they need to remember that Africa has the fastest growing population and abundant natural resources. Covid19 will force most African governments to assess all activities and prioritise sectors that warrant access to the limited resources at its disposal.
There is the need to develop infrastructure to service an ever-growing African market and billions of dollars of investment will be required over the next decade,” said Emil Rademeyer, managing director at ABiQ.