Within the next year, Egypt could overtake South Africa as the best investment destination on the continent, according to Neville Mandimika, Africa analyst in the global markets division of Rand Merchant Bank.
He told Exporters’ Club Western Cape (ECWC) members recently that South Africa had been the leading economy on the continent for several years but that the gap was fast closing as several economies were investing heavily in infrastructure, policy stability and market diversification.
“Investors want certainty and at present that is simply just not the case in the country,” he said.
Concerns are also growing over the increasingly difficult business environment.
“Countries are catching up to South Africa and they are doing it quickly,” he said.
When expanding into Africa, Mandimika advised exporters to consider not only the size of markets but how easy it was to operate in those markets.
He said while Nigeria was a large market, it was an increasingly difficult market in which to operate - which is why several top South African retailers had pulled out.
“At RMB we have adopted a relatively simple methodology to guide investment in the continent,” he said. “We look at the market size and how fast it is growing and then we consider how easy or difficult it is to transact in.”
According to Mandimika, with this in mind, the top destinations for investment in 2017 are South Africa, Egypt, Morocco, Ghana and Kenya.
He said aspects such as political and regulatory stability as well as corruption were all part of the operational pillar.
“How easy is it to get goods in and out of a country, how easy is it to get money in and out and how safe is the investment are all questions that need to be considered,” he said.
Rwanda was making good progress, he added, as were Cote d’Ivoire and Zambia.
But of most concern was South Africa which was fast proving to be extremely uncertain.
