South Africa is still Africa’s most attractive investment destination – but its lead is narrowing fast. According to Celeste Fauconniers, an analyst with Rand Merchant Bank (RMB), Nigeria should take the top spot within three years, with Egypt following hot on its heels. Commenting on the findings of the second ‘RMB Where to Invest in Africa’ report, Fauconnier said the gap between South Africa and Nigeria was closing rapidly. “Nigeria is in the process of rebasing their GDP that will see them include several sectors that are not currently part of their numbers when calculating their GDP. They have not updated their GDP profile for at least 15 years and once they do that we will see them take the top spot within two years,” she said. While it was expected that the rebasing of their GDP figures would be completed at the end of the year, Nigerian officials earlier this month announced the process would only be finalised in 2014. “It really is only a numbers exercise at this point. They are undoubtedly going to become the top Africa investment destination. We have already taken their new GDP figures into account and crunched our own numbers and we expect to see them grow their economy by at least 60% in the next five to ten years.” She said Nigeria offered major opportunities to exporters wanting to invest in Africa as the country was also going to great lengths to diversify its economy while at the same time the growing population and urbanisation being experienced were positive signs. Through an annual survey RMB rates countries in Africa from most to least attractive as investment destinations, taking factors such as market size, market growth and operating environments into consideration. “Out of the current top three South Africa has by far the best operating environment but the slowest growth,” said Fauconnier. “Nigeria on the other hand will see growth of more than 7% in the next few years while major efforts are under way to improve its operating environment to make it easier to do business in the country while it is also investing heavily in infrastructure.” Fauconnier, however, advised exporters to do their homework well before just heading off into Africa to invest. Citing the example of a major South African retailer who set up shop in Angola, she said logistics costs had to be reconfigured after they had opened stores as they found it impossible to ship goods into the country thanks to the congestion at the various ports. “Now they are having to transport all of the imports into Angola for their stores via road which has an impact on cost and timelines.”
