East Africa tops the continent in terms of rewarding investors for the risks they take in pumping money into the region.
A study by consultancy firm Control Risks Group shows that Tanzania, Kenya, Uganda and Ethiopia offer investors a reward score above the continent’s average.
Ethiopia and Tanzania top the 2018 Africa Risk-Reward Index of the high rewarding economies for the second time, followed by Côte d’Ivoire and Kenya in fourth place.
Uganda is one of the strongest performers in the 2018 index as relative political stability under President Yoweri Museveni could reduce bureaucratic delays in the implementation of priority national projects such as oil production or infrastructure projects.
However, concerns over a deteriorating security environment could erode Uganda’s improved risk score.
Ethiopia’s risk score of 5.79 is also above the continent’s average of 5.54 due to the country’s political transition under Prime Minister Abiy Ahmed.
The government’s privatisation push in the energy, telecoms and logistics sectors also offers new and exciting opportunities for investors. The country has an impressive reward score of 7.94 out of 10.
Tanzania remains an interesting but volatile target for potential investors due to its great economic potential across sectors from energy to agro-processing.
This follows President John Magufuli’s legislative changes that have given his government sovereignty over mineral wealth, alarming investors.
Kenya’s protracted 2017 election period reduced investment levels, but 2018 is an exciting year for investment with the reward score remaining one of the highest in sub-Saharan Africa.
Africa’s largest markets — Nigeria, South Africa and Egypt — improved their Risk-Reward scores. Zimbabwe, Mozambique, Zambia, and Senegal also rank among the top 10 countries that improved their reward scores and reduced their risk scores.