Investment bank identifies four African countries that continue to surprise

South African based Rand Merchant Bank (RMB) has recently released its 2013/14 ‘Where to Invest in Africa’ report, which ranks African countries according to their attractiveness for corporate investment.

The top 10 most attractive destinations remain the same as last year: South Africa, Nigeria, Egypt, Ghana, Morocco, Tunisia, Libya, Ethiopia, Tanzania and Kenya.

To compile the rankings, RMB looked at the market size, market growth and the business environment of each country.

RMB has however, highlighted four countries that continue to surprise, both on the up and downside.

Ghana: The report notes that for a small country, Ghana continues to perform well. It is ranked fourth in Africa and 47th in the world. “This ranking is just shy of the much larger and well known emerging markets of Vietnam and the Philippines, and is three places higher than Italy,” notes the report.

Ghana started with offshore oil production in 2011, and the industry has been responsible for much of the country’s rapid economic growth over the past two years.

Ethiopia: Although many still associate Ethiopia (ranked in eighth position) with poverty and famine, the country is experiencing exceptional rates of economic growth. It also has a relatively large economy which is a result of its sizeable population of over 85m people.

Rwanda: RMB says continued reforms in Rwanda have created a favourable operating environment and spurred economic growth. Rwanda has made great strides since its tragic 1994 genocide.

In 2011, Charles Robertson, global chief economist at Renaissance Capital, wrote that a visit to Rwanda was the greatest positive shock of his professional career. He stated that Rwanda is implementing many of the same economic reforms that Singapore introduced since the 1960s to transform itself into one of the world’s foremost financial centres.

RMB notes that Rwanda’s ranking (14th) is being held back by its relatively small market size of about 10m.

Angola: While the first three countries were highlighted for outperforming expectations, Angola is not delivering on the growth people anticipated a few years ago.

Angola is placed 20th in RMB’s rankings. “This is down from the third position it held in 2006 and 2007 if we apply our methodology over a longer period. The decline is mainly from the slowdown in growth: back in 2006-07 GDP was growing and was expected to keep growing at 15% per annum. Growth expectations are now 6% – still very attractive but far from what they were. There has also been a deterioration in the operating environment,” says the report.