Empire

Dedicated to tracking Africa’s wealth, monitoring stories of people, platforms and processes shaping Africa’s financial fortunes. Put the other way round, this is where we follow the money.

Botswana is Africa’s most attractive investment destination

Botswana is the most attractive economy for investments flowing into the African continent, according to the latest Africa Investment Index (AII) by Quantum Global’s independent research arm, Quantum Global Research Lab.

Botswana scores highly across the categories of factors like credit rating, current account ratio, import cover and ease of doing business. Morocco is second on the index, scoring well in risk factors such as current account ratio and import cover, and on ease of doing business. Egypt ranks third with high scores in GDP size, population size, real interest rate and ease of doing business. South Africa is fourth on the index, while Nigeria ranks 19th behind Ghana.

Ghana is the eighteenth most attractive economy for investments flowing into the African continent. According to research by Quantum Global Research Lab (QGRL), Ghana’s economy has experienced strong and robust growth over the past decade, making its success a case worth emulating by its regional peers. Industry was the main driver of overall growth with an annual average growth of about 13 percent, followed by services with 8.4 percent and agriculture with about 8 percent. The strong growth record has fostered the country’s graduation to lower-middle-income status in 2010.

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Commenting on the Ghanaian economy, Prof Mthuli Ncube, Head of Quantum Global Research Lab stated: “Ghana’s democratic attributes are as robust as its economic growth, and by improving policies and institutions, successive governments have been able to build an attractive business climate conducive to growth. These measures include reducing the number of days it takes to register a limited liability company and days spent on resolving commercial disputes in the courts. Furthermore, the election of a new Government in 2016 has revitalized the drive for higher growth and infrastructure investment, all which augurs well for investment opportunities in the country.”

The research noted that whilst the economy continued to grow on a steady pace until 2013, the GDP growth slowed from 7 percent in 2013 to 3.6 percent in 2016 due to structural challenges such as the on-going fiscal deficits pushing public debt to over 70 percent of GDP, trapping the country in a cycle of debt service and borrowing.

Furthermore, a 3-year power crisis and power rationing slowed down private sector’s productivity and competitiveness. In addition, the significant external sector deficit and low world prices for the country’s gold, cocoa and oil export were a major factor behind the economic slowdown.

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According to the research, the financial sector in Ghana has undergone restructuring and transformation, and the supervisory framework is relatively strong. Bank credit to the private sector has increased, and capital markets are developing. The sector was rated as fairly developed by the 2014-2015 Global Competitiveness, with Ghana ranking 67th from 116th out of 148 countries.

According to the AII report, the top five African investment destinations attracted an overall FDI of $13.6bn.