The world‘s poorest continent had seen an investment boom in recent years, but flows into the region are seen drying up as the global financial crisis and falling commodity prices take the shine off what were seen as promising frontier markets.
Business consultancy, African Rainbow‘s Star of Africa index ranks 53 African countries in terms of their investment potential in various fields, with its creators arguing that potential growth in energy, water and communications consumption could amply reward investors taking the risk, Reuters reported on Wednesday.
”It is for investors to make sure they don‘t miss a trick by overlooking a country they would otherwise have missed,” Chief Executive of African, Rainbow, Katharine Pulvermacher, said.
”Africa is going to overtake the Middle East to become the second fastest growing region in the world after emerging Asia. It will be affected by the global financial crisis but it is much less exposed than many places,” she added.
South Africa, Mauritius and Tanzania took third, fourth and fifth place respectively, she said.
But the company said some countries still had a long way to go, with Somalia, Chad and Eritrea named the least appealing markets on the continent, particularly due to low ratings for corporate governance and social capital.
Nigeria also scored poorly for corporate governance but its potential for infrastructure expansion in electricity, water, information technology and communications as well as its status as Africa‘s most populous country were enough to propel it to the top of the list Reuters said.
Rising oil prices had made Nigeria a favoured investment destination but as the oil price slumped in recent months, the government has imposed capital controls as the currency fell, leaving investors concerned that they might not get their money out.
Pulvermacher said such events were covered under ”corporate governance” and that different investors would have different tolerances for risk and reward.
”Some investors would view corporate governance as more important than others,” she said. ”They might be more drawn to somewhere like Tanzania, which performs much better against those measures -- which they might not have realised.”
She said the index was mainly intended for medium scale investors such as private equity houses making investments larger than those which would be covered by the microcredit sector
culled from the online edition of the Punch Newspapers[http://www.punchng.com/Articl.aspx?theartic=Art2009021919936560)
