Morocco is the new investment capital of Africa

Where does smart money go?
Where does smart money go?
Image: Reuters/Youssef Boudlal/Illustration
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Abidjan, Côte D’Ivoire

Investors betting on the economic promise of Africa should be looking to the north of the continent.

That’s according to the 2018 Africa Investment Index (AII) compiled by Quantum Global Research Lab, the research arm of a private investment group. Northern Africa dominates the top of the list, with Morocco, Egypt and Algeria taking up the top three positions respectively. Morocco’s emergence as the top investment destination, one place up from last year, is attributed to its “receptive business environment” and “low risk profile.” Egypt and Algeria score high marks for liquidity.

The index was released yesterday (March 26) on the sidelines of the Africa CEO Forum in Abidjan, Côte d’Ivoire. Mthuli Ncube, the managing director of the lab, said the AII is compiled by measuring six major factors—growth, liquidity, risk, business environment, demography and social capital—to “paint a picture of the investment attractiveness of countries in the medium term.” In contrast, he said, the World Bank’s “Doing Business” report focuses “too much on institutional factors.”

Botswana, fourth on the index, is the highest ranked country in sub-Saharan Africa, and scores highly in business environment and risk factor parameters. But it’s a bit of a slump for a country that was ranked last year as the continent’s top destination on the index, and that has been emerging as a leader on the continent after standing up to US president Donald Trump.

Some of Africa’s leading commodity-based economies do not feature among the top draws. After periods of recession, Nigeria (ranked 14th) and Angola (ranked 19th) are only just starting to recover as the price of oiltheir biggest exportshas rebounded after a two-year slump.

Aside from a broad ranking, the index also identifies leading countries based on each measuring factor. Ethiopia, having averaged 8.4% GDP growth in the past three years, takes the top spot for growth, while South Sudan’s oil-dependent and cash-based economy is the best ranked for the liquidity. Botswana offers investors the least risk, while Nigeria, with more than 180 million people, is the top ranked by demographics. Seychelles, with its “high trade openness” is ranked as the most conducive business environment and, for social capital, Tunisia is determined to be the easiest country to establish personal and business relationships.