Ghana, Nigeria and Senegal were rated high on risk-reward scores amongst West African economies covered in the latest 2018 Africa Risk-Reward Index published by Control Risks and Oxford Economics
The researchers attributed the improved performance of the countries to increased political stability, improved commodity prices and effective public economic reforms.
Specifically, the report sourced from Africa Press Organisation (APO) Group, indicated that Ghana led these positive developments for West Africa, recording the strongest improvement in its risk-reward score in Africa, after Zimbabwe and Egypt.
The researchers stated that both Nigeria and Senegal benefitted from a greatly improved risk score.
Commenting, Senior Partner for West Africa at Control Risks, Tom Griffin, said: “In 2017 many West African governments have embarked on an impressive journey to implement the right reforms for economic growth and improvement of investors’ confidence.
“Since coming to power in January 2017, Ghana’s government has continued to undertake a programme of macroeconomic reforms which have focused on reducing the deficit and external debt. In the last year, this had a particularly positive impact on issues such as credit and exchange risk.
“At the same time, Ghana has attempted to improve the business environment for investors by reducing the bureaucratic and taxation burden, as well as laying out plans for further investment activity in the oil and gas and manufacturing sectors.
“In Nigeria, the recently initiated Economic Recovery and Growth Plan has begun to tackle some of the economy’s challenges, including corruption and an infrastructure deficit. The plan has also sought to remove bottlenecks to improve the ease of doing business, which in turn boosts investors’ confidence.
“In the last three years, Senegal’s Emerging Senegal Plan has already led to steady growth, reaching close to 6.4% in 2017. The reduction in its risk score is one of the most positive changes in the 2018 Africa Risk-Reward Index and can be explained by structural reforms to improve the business environment, strengthened macro-economic fundamentals and a controlled debt management policy”, Griffin added.
Further findings of the report showed that Angola’s leadership change has not yet improved its reward score, but its risk score has gone down, while South Africa slightly increased reward score and reduced risk score as political uncertainty eases
In addition, the researchers noted that Kenya’s reward score remained one of the highest in sub-Saharan Africa, but that the government’s external debt burden raises concerns. This is even as they pointed out that Côte d’Ivoire, with a forecasted real GDP growth rate of 7% in 2018, continued its impressive economic recovery, but that great challenges remained for the country:
The report stated: “With reforms to the business environment and efforts to bring foreign investors back after the 2010-2011 crisis, Côte d’Ivoire has achieved amongst the highest growth rates in the world in recent years, and sectors such as construction, telecommunications, banking and retail have seen considerable growth.
“However, severe obstacles to a full recovery persist, including political interference and corruption, socioeconomic discontent, shortcomings in security-sector reform, and growing competition ahead of the potentially volatile 2020 presidential poll”, it added
For Senegal, the researchers noted that the country’s growing investment and a reduced risk score presage continuous growth, adding that under the Emerging Senegal Plan, growth has increased steadily over the last three years, reaching close to 6.4 percent in 2017.
“Growing exports, a more diversified economy and increased interest from large international investors as a result of the promising offshore oil and gas discoveries make Senegal one of the poster children in sub-Saharan Africa.
“The reduction in its risk score is one of the most positive changes in the 2018 Africa Risk-Reward Index”, the report added.
According to the researchers, Morocco’s economic reforms improved the country’s resilience and made its exports more competitive, but social discontent in the country remained a challenge.
They noted that with one of the lowest risk scores on the 2018 Africa Risk-Reward Index and a relatively stable reward score, Morocco’s economic reforms proved to be a success.
In addition, the researchers predicted that the country’s Medium-term growth will be enhanced by continued reforms to facilitate foreign investment, access to finance, quality of education and the business environment, as these represent the primary constraints to competitiveness and doing business.
This is even as the researchers raised concerns over the country’s social-economic unrest over poor living conditions persists, particularly in interior regions.