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Africa Risk-Reward Index November 2018: investment climate strengthens as continent’s growth revives despite the drag from its biggest economies

Africa Risk-Reward Index November 2018:  investment climate strengthens as continent’s growth revives despite the drag from its biggest economies

Africa’s investment environment for both businesses and financial investors is now reviving, with a continuing and steady improvement in the trade-off between risk and reward as growth on the continent rebounds, the third edition of the Africa Risk-Reward Index from specialist risk consultancy Control Risks (www.ControlRisks.com) and Oxford Economics (https://www.OxfordEconomics.com/) finds.

After several years of political and economic turbulence, with the weakest growth since the early Nineties, the report now projects an accelerating resurgence in growth in Sub-Saharan Africa (SSA) to the end of the decade that will see strengthening investment returns versus risk. SSA GDP growth is forecast to climb to 3.7% next year, after picking up to 2.9% this year from 2.6% in 2017, and an anaemic 1.1% in 2016. By 2020, SSA growth should reach a buoyant 4.3%. Other key economic indicators, such as levels of foreign direct investment, have also been improving. Crucially, the latest Africa Risk-Reward Index findings highlight how the recovery in sub-Saharan Africa’s outlook is not being driven by the “usual suspects” of the region’s major economies, notably Nigeria and South Africa.

Along with Angola, the index finds that Nigeria and South Africa have seen only minor improvements in the risk-reward trade-off since the last report in June. This chimes with recent warnings from the International Monetary Fund (IMF) that poor relative performance by these economies is holding back the wider African economy.

The far-reaching political change occurring across swaths of sub-Saharan Africa since late 2017 have seen  reform agendas being pushed by new leaders in countries such as Angola and Ethiopia that represent broadly positive steps towards future growth. However, the report finds that only in Zimbabwe have the current wave of reforms yet led to significant improvements in our risk-reward scores.

Barnaby Fletcher, senior analyst at Control Risks comments: “Since the first edition of the Africa Risk-Reward Index, the continent has seen dramatic political changes. However, what we are seeing is that ambitious rhetoric from new leaders is no substitute for solid structures and sensible policies built up over many years. Obtaining an understanding of an investment destination that goes beyond the headlines is therefore crucial.”

Jacques Nel, Chief Economist for East & Southern Africa at Oxford Economics adds: “From the reward point of view, the most interesting change in the index since the first edition is the improvement by one of the continent’s giants, Nigeria, which has emerged from recession thanks to a combination of policy initiatives and a recovery in oil prices. This more favourable outlook is reflected in its latest reward score, which shows it gaining some ground on other African geographies.”

This third edition of the Africa Risk-Reward Index explores the impact of current and future political change in more detail, focusing on recent and upcoming elections in Congo (DRC), Nigeria and Gabon, and their potential impact. It also explores several smaller markets for investors, considering the outlook for Uganda and Rwanda, two countries with a number of parallels, but where differing economic ideologies and leadership styles have seen their trajectories diverge, although growth and investment prospects will remain positive for both countries.

The index also considers prospects in Tunisia, which has struggled to fully recover from the Jasmine Revolution of 2011, but where there are some early signs that the ambitious reform agenda pursued by the government is starting to have a positive impact.

The November 2018 Africa Risk-Reward Index can be downloaded here: www.ControlRisks.com/ARRI

Distributed by APO Group on behalf of Control Risks Group Holdings Ltd.
Media contact:
Carlo Romao
Africa Marketing Manager
carlo.romao@controlrisks.com 
+27 66 489 1794

Gary Duncan
Director of Communications, Oxford Economics
gduncan@oxfordeconomics.com
+44 (0)7788 155 715

About the Africa Risk Reward Index:
The Africa Risk-Reward Index (www.ControlRisks.com/ARRI) plots each country’s performance relative to its African peers by comparing some of the continent’s largest and emerging markets. The position of each country is defined by its risk and reward score with the size of its bubble representing the size of the country’s GDP.

About Control Risks:
Control Risks (www.ControlRisk.com) is a specialist global risk consultancy that helps create secure, compliant and resilient organisations. We believe that taking risks is essential to success, so we provide the insight and intelligence you need to realise opportunities and grow. And we ensure you are prepared to resolve issues and crises. From the boardroom to the remotest location, we have developed an unparalleled ability to bring order to chaos and reassurance to anxiety.

About Oxford Economics:
Oxford Economics (https://www.OxfordEconomics.com/) is a world leader in global forecasting and quantitative data analysis, acting as a key adviser to corporate, financial and government decision-makers, and thought leaders. Our worldwide client base comprises international organisations, including leading multinational companies and financial institutions; key government bodies and trade associations; and top universities, consultancies and think tanks. Oxford Economics has a global team of over 200 professional economists and econometricians situated in 20 offices around the world that help clients quantify global impacts and analyse shifts in the macroeconomic environment to assess the effect on their business and organisations.

Control Risks and Oxford Economics 
Control Risks and Oxford Economics have joined forces to provide an innovative political and economic risk forecasting service that takes a holistic view of risk in a complex, rapidly changing, globalised world. Control Risks and Oxford Economics combine extensive geopolitical, operational and security expertise with rigorous economic forecasts and models on 200 countries and 100 industries. Together, we offer full-spectrum consulting that enables your organisation to navigate the world of political and economic risk. Covering all aspects of the investment journey, including security and integrity risk, our joint consultancy practice can overlay geopolitical and economic scenarios to bring new insights and direction.
Control Risks Group Holdings Ltd
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