Nigeria fast closing in on SA

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.”