Rwanda is one of the 10 most attractive nations in Africa for investors, according to the 2016 Ernst & Young (EY) Africa Attractiveness Index. The country was ranked ninth and the second most preferred investment destination in East Africa after Kenya, which came fourth on the continental ranking and first in the region. Tanzania and Uganda were ranked 12th and 13th, respectively, on the continent.
The report, released last week, evaluates progress made in governance, diversification, infrastructures, business enablement, human development, as well as resilience to current macro-economic challenges.
According to the survey, South Africa is the most attractive nation for investors followed by Morocco, Egypt, Kenya, Mauritius, Ghana, Botswana, Tunisia and Rwanda. Cote d’Ivoire comes tenth.
Though Rwanda, Botswana, and Mauritius are small markets, they have good performances in terms of business enablement, social development and economic management, the survey indicated.
Kenya has a relatively strong economic growth outlook, and good performances in terms of infrastructures and business enablement, it added.
On macroeconomic resilience, Tanzania and Uganda rank very high, the report says. However, they are “relative under-performers on other longer-term focused dimensions.”
South Africa, which is the continent’s most developed nation, was buoyed by good performances in governance, diversification, infrastructures, business enablement and human development.
“From an investment perspective, the next few years may be challenging, this is not because the opportunities are no longer there, but rather because these opportunities are likely to be more uneven than they have been. It is now more important than ever for organisations and investors, who sometimes place great emphasis on shorter term economic growth trends, to adopt a granular, fact-based approach to assessing investment and business opportunities for the long-term,” said Sugan Palanee, the Africa markets leader at EY.
Michael Lalor, the EY lead partner Africa Business Centre, said the evaluation “provides a useful starting point for analysis and helps enable a strategic dialogue on growth priorities and investment criteria.”
The study also reveals that Africa is “one of the only two regions in the world in which there was growth in the number of foreign direct investment (FDI) projects over the past year in 2015”.
The number of FDI projects across Africa was 771 in 2015 against 722 in 2014, thus up 7 per cent. Globally, the number of FDI projects fell by 5 per cent in 2015.
However, these projects generated less in 2015, $7.3 billion, than in 2014, $88.5 billion. Yet revenues generated by FDI projects in 2015 are higher than the yearly average of $68 billion recorded from 2010 to 2014.
Despite these performances, EY estimates that mid-term outlook for many African countries remain uncertain.
These countries include Nigeria and Angola that are presently suffering from slump in prices of oil.
Kenya and Tanzania are among the 17 sub-Saharan countries which should record a growth equal to or exceeding 5 per cent in 2016. More generally, two thirds of sub-Saharan African economies will have growth rates that are above global average this year.