Sunday , June 20 2021

Africa seeing a reflection in a business confidence report New times



The investment environment of Africa, both for companies and financial investors, comes alive with the continuous improvement of the trade-off between risk and reward as an increase on the continents.

This is in line with the latest edition of the "Africa Risk-Reward Index" from Control Risks and Oxford Economics.

Rwanda has been recognized among countries where the investment climate is likely to increase in the next decade, even though it is a smaller market for investors.

The report particularly highlights Rwanda as a country where mismanagement, burdensome procedures and corruption are rare, leaving the country with a risk score of 5.07 – the lowest in eastern Africa.

He predicts that the growth and investment outlook will remain positive.

He added that the sustainable economic growth of Rwanda and the strong private sector would reduce the country's susceptibility to exogenous shocks in the medium term.

Continent

After several years of political and economic turmoil, the weakest growth since the early nineties, the report predicts acceleration of growth in sub-Saharan Africa until the end of the decade, which will strengthen returns on investment in relation to risk.

It is expected that the continent's GDP growth will increase to 3.7 percent next year, which is a reflection from 2.9 percent this year and 2.6 percent in 2017.

"By 2020, growth should reach 4.3 percent," the report reads.

The findings of the African risk index and awards underline that recovery from the perspective of sub-Saharan Africa is not the result of the "ordinary suspected" major economies of the region, in particular Nigeria and South Africa.

Together with Angola, the index states that since the last report in June, Nigeria and South Africa have seen only a slight improvement compared to the risk reward.

This is in line with the recent warnings of the International Monetary Fund (IMF) that the weak relative results of these economies are stifling the wider African economy.

"The far-reaching political change that has taken place since the generations of sub-Saharan Africa since the end of 2017 has made the reform agenda pushed by new leaders in countries like Angola and Ethiopia, which are essentially positive steps towards future growth," notes the report .

However, the report states that only in Zimbabwe, the current wave of reforms has led to a significant improvement in risk and rewards.

Barnaby Fletcher, senior analyst in Control Risks commentary, said since the first edition of the Africa Risk-Reward Index, there have been dramatic political changes on the continent.

"However, we see that ambitious rhetoric of new leaders can not replace solid structures and sound policies built up over many years, so it is necessary to understand the investment destination that goes beyond the headlines," he said in a statement.

This third edition of the African Risk Indicator and Awards analyzes in more detail the impact of current and future policy changes, focusing on the recent and upcoming elections in Congo (DRC), Nigeria and Gabon and their potential impact.

The index also takes into account the prospects in Tunisia, which fought for a complete exit from the Jasmine Revolution in 2011, but where there are some early indications that the ambitious reform agenda that the government is seeking begins to have a positive impact.

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