The rankings show that Ghana has outperformed other West African countries in terms of investment attractiveness, emerging as the top destination, followed by Côte d’Ivoire, Senegal and Nigeria
The country maintained its position in the rankings from last year.
Ghana entered the current economic crisis on a relatively strong footing compared to its African peers. The country managed to avoid a recession in 2020 and registered growth of 0.4% – outperforming the profile for SSA economies, which contracted by 3.2% on average.
Judging by the rankings, Ghana has outperformed other West African countries in terms of investment attractiveness, emerging as the top destination in the sub-region, followed by Côte d’Ivoire, Senegal and Nigeria.
Strong growth
Structurally, Ghana’s economy has experienced major shifts over the past few years, positioning it for significant growth going forward. This is supported not only by primary-sector industries such as oil and gold but accelerated development in the tertiary sector.
“We see the construction, agriculture and services sector as the main catalysts for strong 4.2% average growth between 2022 and 2023,” the report says.
This year, the economy has shown a steady recovery, with the GDP print in 2Q21 at 3.9%, supported by performance in both the secondary and tertiary sectors.
Over the next few years, oil production output will pick up in the near term, supported by higher oil prices that should encourage further oil exploration in Ghana. There are similar expectations for gold production, which is further supported by government efforts to curb illegal mining activity, thereby promoting the formal sector.
According to the author, RMB’s Africa economist Daniel Kavishe, this year’s report assesses the extent of the pandemic’s impact by sketching the landscape of the continent pre-COVID-19, and then painting a picture of both its actual and potential outcomes through and post-pandemic.
“We created a new set of rankings that incorporated some of the unavoidable COVID-19-induced challenges, of which the operating environment score was one,” Kavishe says.
The report also included an appraisal of governments’ ability to support their various economies during such periods. As such, a fiscal score was also part of the methodology.
Fiscal consolidation
Kavishe says this was essential because “fiscal scores are important indicators of how governments respond to COVID-19”.
For Ghana, the next few years will centre on government’s ability to consolidate fiscal spending, undoubtedly necessary to alleviate the country’s debt burden.
Overall, the report further explored key themes emanating from Africa’s development aspirations. “Of these, three are central to fighting the pandemic and resuscitating economic conditions,” Kavishe says. “They are government intervention, a focus on our triple-threat sectors and health care.”
The report positions Egypt as Africa’s top investment destination, with Morocco next and South Africa in third place. Piggybacking off their operating environments, other high-scoring countries have moved up the rankings – notably Rwanda and Botswana, now in fourth and fifth position, respectively.
Historically, investment destinations in Africa have been ranked according to the tenets of economic activity and business operating environment. Aimed at investors targeting real assets in an economy or looking to expand businesses that rely on physical infrastructure, the rankings offer a strong basis for investing.
This year demanded more nuance. In addition to traditional indicators, corporates and investors needed to be made aware of the state of a country’s government finances and its ability to assist its economy in crisis.
Top 10 countries by investment attractiveness
- Egypt: While Egypt’s economy was hard hit by the pandemic, it was also one of the first to bounce back to a path of growth. This is attributable to the swift measures it introduced and the fact that it been on a stronger footing at the outbreak of COVID-19.
- Morocco: The economy continues to benefit from political stability. A special fund to combat COVID-19 was established in 2020, absorbing 2.7% of GDP. Two-thirds of the funds were to be provided by private sources and one-third by the government.
- South Africa: The southernmost country in Africa offers a strong manufacturing and retail base that will continue to support Southern African regional economies with goods and services.
- Rwanda: Rwanda continues to benefit from the efforts it has made to improve its operating environment. Furthermore, as part of its National Strategy for Transformation (NST), various investments should support the construction and energy sectors over the next few years.
- Botswana: The country has high foreign-exchange reserves, which have enabled it to weather the pandemic-induced economic storm better than most. The Pula Fund, a sovereign fund created in 1994 that finances a large part of the budget deficit, has allowed the national fiscal dependency on debt to remain low.
- Ghana: Ghana entered the current crisis on a strong footing compared to its African peers. Structurally, its economy has seen big shifts over the past few years, positioning it for significant growth going forward. This is supported not only by primary-sector industries such as oil and gold, but also accelerated development in the tertiary sector.
- Mauritius: Aided by an extremely favourable tax regime, Mauritius’s financial sector will remain one of the main drivers of the country’s economy into the future – notably through cross-border investment activities and banking services.
- Côte d’Ivoire: A rise in private investment should continue to fuel construction, agri-industry and services (trade, transport and ICT in particular). Private investment will benefit from the impetus provided by public investment under the 2016-20 National Development Plan.
- Kenya: The Kenyan government’s efforts to ensure that implementation of the “Big Four” plan focuses on industrialisation, universal health coverage, food security and affordable housing will invariably lead to fast economic growth.
- Tanzania: Tanzania has been on a rapid path of development over the past few years. This can be attributed to consistent public investment from the government in key secondary and tertiary sectors, ranging from the energy sector to advancements in the telecommunications and finance sectors.
Source: Joseph Appiah-Dolphyne | asaaseradio.com