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This Is The Most Attractive Country For Investment In Africa For The Second Time In A Row

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Are you looking for the best country for investment in Africa? Look no further because the Rand Merchant Bank (RMB) in South Africa has released a new study report.  It shows exactly where you should be thinking about for 2019. However, the study shows that the most attractive country for investment in Africa is not in the south of the continent.

According to this report by RMB, Where to Invest in Africa 2019, the business and investment environments in the continent has improved since 2017. However, the report singles out a few hurdles that continue to hinder more accelerated development in Africa. These issues include frail governance, reduced access to financing services, problems of infrastructure, rampant corruption in some countries as well as political unrests in some places. But generally, Africa, according to the report, has made important milestones that seek to attract and retain both local and foreign investments in the continent.

Investment Attractiveness Index for Most Attractive Investment Destination

The RMB uses an appropriate Investment Attractiveness index in order to make an assessment and rank the country. The index takes a look at the operating circumstances and economic environments of a country to gauge its potential to attract and retain local, international, and foreign investments. And Viola! Just like that and for the second year in a row, Egypt is the most attractive investment destination in Africa for 2019.

As expected, Egypt got a run for its money from the usual archrivals in the continent. Coming in second position from Cairo all the way down to Cape Town, was South Africa. But following closely in third position was Morocco, while Ethiopia and Kenya came in that order to complete the list of the top five most attractive investment destinations in Africa.

Why Is Egypt the Most Attractive Country of Investment in Africa?

The RMB report associates Egypt’s top rank in Africa with very important milestones. In order to have Egypt as the best, the report singles out the following reasons;

  • A diversified economic environment.
  • Escalating consumer market,
  • Growing availability of hard currency.
  • Stability in exchange rates.
  • Stable improvement in business and investment environments, predominantly in investment-related legal reforms.

Additionally, Egypt is the largest beneficiary of direct foreign investment in Africa. It also has the largest consumer market not only in North Africa, but also in the Middle East.

“Egypt’s economic gain keeps on dominating that of South Africa,” the report says “as South Africa’s growth projections and the size of its economy are lower than those of Egypt and this weighed down its investment ranking.”

Top Ten Countries for Investment in Africa

In addition to the top five most attractive investment destinations in the continent, other usual contenders in African development were named. In a consecutive order from fifth to ten position, the countries are as follows;

  1. Egypt
  2. South Africa
  3. Morocco
  4. Ethiopia
  5. Kenya
  6. Rwanda
  7. Tanzania
  8. Nigeria
  9. Ghana
  10. Ivory Coast

Countries with the Easiest Business and Investment Environments

Mauritius

The country that has the easiest business environment is Mauritius. This is followed by Rwanda while Botswana comes in third. In order to complete the best five countries where doing business is the easiest, the list includes South Africa and Seychelles in that order.

In conclusion, Egypt, Nigeria, and South Africa are the 2018’s three most dominant countries in Africa in terms of GDP. The combined market in these three countries makes up almost half of the approximated $7 trillion market in Africa. In order to maintain this investment attractiveness, Africa expects to improve individual business operating environments.

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Business and Development

Pan African eCommerce Giant Jumia Makes History with NYSE listing

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Jumia

Jumia Technologies made history on 10th April 2019 following the approval of the Securities and Exchange Commission (SEC) allowing the pan-African e-commerce giant to sell its shares on the New York Stock Exchange (NYSE). Consequently, Jumia started trading its shares at $14.50 using the ticker symbol JMIA. This makes Jumia Technologies the first African startup to secure major global exchange listing.

Jumia is currently active in fourteen African countries including Nigeria, Ivory Coast, and Tanzania. The e-commerce platform has 81,000 active sellers with over 5,000 direct employees. According to a statement contained in its recent SEC filing, Jumia Technologies added three hundred thousand new active customers in the first quarter of 2019.

Through the sale of its American Depositary Shares, the company can raise up to $316. According to the Corporate Communications officer, Lisette Kwong, Jumia initially set its IPO at $14.50 but it opened and closed at higher prices.

Jumia’s Brief History and Growth

Jumia was co-founded in 2012 by Sacha Poignonnec, Jeremy Hodara, Tunde Kehinde and Raphael Kofi Afaedor. The company was an outgrowth of the Rocket Internet Company. However, its rapid growth allowed it to secure funding from investors like Millicom group, MTN, Orange, Goldman Sachs, and CDC. According to The Guardian, MTN is the largest shareholder with 29.7%. Rocket Internet is second on the log with 20.6%. Other investors and their stake include AXA Africa holdings (5.8%), AEH New Africa eCommerce (8.4%), and Millicom (9.6%).

The two Nigerian co-founders, Raphael Afaedor and Tunde Kehinde are credited with the creation of some of the company’s components including JumiaPay. However, they left the company in 2015 to build other startups.

What Next For Jumia?

Jumia’s share price was up by 61% in early trade. Inasmuch as NASDAQ is traditionally for technology companies, Jumia decided to list on NYSE. The Head of International Capital Markets at the NYSE, Mr. Alex Ibrahim said the company did so because they saw the benefits. According to Ibrahim, the volatility of NYSE is higher than its competitors. Speaking on the listing of the company on NYSE, the co-founders said,

“This achievement has been made possible thanks to the hard work of our teams, the trust of our consumers, as well as the commitment of our sellers and partners. All stakeholders deserve credit for this milestone, and we are just at the beginning of a long and great journey. We are going to continue to focus on our mission and to work even harder to help consumers, sellers, partners, and all stakeholders benefit from this technological revolution.”

Previous Awards

Jumia is attracting lots of attention but the pan-African eCommerce giant is not a stranger to accolades. Some of the awards on Jumia’s archive include;

  • Best New Retail (World Retail Awards 2013)
  • Online Retail Brand of the year (Brand Journalists Association of Nigeria (2013)
  • The innovative business of the year (Success Digest 2013)
  • Leadership ICT company of the year (2013)
  • Best use of Mobile App (Rima Awards)

E-commerce website of the year (Beacon of ICT Award)

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Gambia’s AfCFTA Ratification Means Africa Will Soon Become The Largest Free Trade Area In The World

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Gambia President Adama Barrow

The dream for a Continental Free Trade area in Africa became a reality when Gambia ratified the agreement. Initially, prospects of the agreement becoming a reality were hindered by a lack of numbers—falling short on the minimum threshold. With Gambia ratifying the agreement, the bill can now be actualized.

Gambia became the 22nd African country to approve the African Continental Free Trade Area Agreement—AfCFTA. Ethiopia was the 21st country to ratify AfCFTA when it approved the agreement on March 21, 2019. Gambia parliament ratified the agreement on April 2 2019.

African Continental Free Trade Area Agreement

The African Union brokered the agreement in 2018. The agreement was then signed by 44 countries on March 21 2018 in Kigali, Rwanda—out of a total of 55 member states. Among other provisions, the agreement requires member states to remove tariffs from 90 percent of goods. In addition, member countries will be required to allow free access of goods and services across the continent.

From March 17 to March 21, 2018, an Extraordinary Summit on AfCFTA was held in Kigali, Rwanda. During the summit, the agreement establishing AfCFTA was presented to African leaders for signatures. The agreement was framed such that it goes into force 30 days after 22 countries have ratified the agreement instruments. Furthermore, ratifying states are required to deposit the instruments with the Chairperson of AUC—African Union Commission.

Gambia’s ratification and completion of all due processes satisfy this constitutional requirement to bring the agreement into effect.

Required Instruments

Only 20 countries have ratified and deposited the required instruments with the AUC Chairperson—as of April 16, 2019.  Two countries, Zimbabwe and Sierra Leone, have obtained parliamentary approval but have not deposited the instruments.

The 20 countries that have already deposited the instruments of ratification include The Gambia, Ethiopia, Egypt, Togo, Senegal, Ivory Coast, Uganda, South Africa, Namibia, Mauritania, Mali, eSwatini (former Swaziland), Guinea, Djibouti, Congo Republic, Chad, Niger, Rwanda, Kenya, and Ghana.

Notable Non Signatory

The AfCFTA is moving forward, however, Nigeria’s lack of commitment to the agreement is a big blow. Nigeria is Africa’s largest economy but only an estimated 10% of its trade volume is done with other African countries. Nigeria’s hold out has been blamed primarily on influential Labor Unions

During the 2019 African CEO Forum in Kagali last month, President Kagame of Rwanda who had championed the AfCFTA during his tenure as the African Union Chairperson shared that he had reached out to Nigerian president Muhammadu Buhari to sign the deal.

There are still concerns however about how the agreement will be executed. At the same event, African billionaire Naguib Sawiris said: “The challenges are going to be in the implementation.”

Impact of the Agreement

The AfCFTA is expected to boost free trade and investment across Africa. Once it comes into effect, the African Continental Free Trade Area Agreement area will create the largest free trade area in the world. The agreement will bring together all the 55 member states of the AU. This means the agreement will cover a market of over 1.2 billion people. The Economic Commission for Africa estimates that this agreement has the potential of boosting intra-African trade by 52.3 percent.

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Mauritius and Kenya Sign New Deal. Ban Lifted on Kenya’s Produce

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Kenya’s president and Mauritius Prime Minister witness the signing of the deal

Kenya and Mauritius signed a new deal that saw Mauritius lifting a ban on Kenyan farm produce. The new agreement enhances trade between the two African countries. Mauritius had initially banned baby beans, baby carrots, broccoli, and avocados from Kenya. Bilateral talks between Mauritius Prime Minister Pravind Jugnauth and Kenya President Uhuru Kenya culminated in the lifting of the ban on these products.

Agreements

The bilateral talks also saw the signing of the Double Taxation Avoidance Agreement—DTAA. In addition, the two leaders signed a memorandum of understanding on cooperation for the development of an Export Processing Zone in Kenya.

Kenya and Mauritius also signed an Investment Promotion and Protection Agreement. Other agreements signed include MOU in the field of arts and culture, an MOU in the field of higher education and scientific research, and an MOU on tourism.

Impact of the Deal

The signed agreements will boost Kenya’s ambitions to reach its development goals. According to President Kenyatta, the agreements will particularly boost Kenya’s manufacturing sector and create employment opportunities.

The new deal will further foster cooperation between Mauritius and Kenya. This means that the cordial relationship between the two countries is enhanced. This relationship will boost trade and investment opportunities in both countries.

Both Kenya and Mauritius have long coastlines, and more benefits can be derived in their blue economies through cooperation. President Kenyatta stated that there is a need for the two countries to look for ways of enhancing maritime transport by linking the Port of Mombasa to Port Louis. An established link is considered a catalyst for growing trade and businesses in the two countries.

The key benefit to Kenya from the deal is the promotion of its agricultural produce. Mauritius lifted a three-year ban on Kenyan avocado. Kenya lost the avocado market in Mauritius in 2015. The ban was due to the Mauritian National Plant Protection Office citing low hygiene standards of the Kenyan avocados. Lifting of the ban will now see more exports of avocados to Mauritius, along with other farm produce such as baby carrots and broccoli.

Kenya’s deal with Mauritius follows an initial pact with China. In 2018, Kenya signed deals with China and the Republic of Korea that opened opportunities for farmers to export more agriculture products to the two countries. The Kenya-China agreement opened opportunities for Kenya to export meat, flowers, and a selection of fruits and vegetables to China.

Kenyatta’s visit to Mauritius for the deal makes him the first Kenyan president to visit Mauritius.

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