Last Updated on November 23, 2021 by Ope Quadri
On the global ranking of ease of doing business, Nigeria isn’t a conducive environment for investment, but the report by the Absa Africa Financial Markets Index 2021 (AAFMI) says Nigeria is the third most attractive country in Africa for foreigners to do invest.
Producer: Official Monetary and Financial Institutions Forum (OMFIF)
Sponsor: Absa Group Limited
Focus: Foreign Investment in 23 African countries
In the 44-page report sent to InfomediaNG Business Solutions, the survey ranked 23 African countries by using six key indicators (pillars) which are:
- market depth
- access to foreign exchange
- market transparency, tax, and regulatory environment
- capacity of local investors;
- macroeconomic opportunity
- enforceability of financial contracts
The report in its 100 points against each indicator for the countries noted that “Average scores declined to 46.4 from 50.8 last year (2020), with only seven countries earning above 50.”
In the rank, South Africa came first with 86 points, followed by Mauritius with 70, and Nigeria came third with 63 while Ethiopia, Cameroon, and Lesotho are worst for foreign investment.
Recall that in one of our reports that Mauritius is the best place to do business in Africa in World Bank Group’s Doing Business Index 2020.
AAFMI which ranked them on each of the pillars reveals that South Africa maintained No. 1 position in market research, Nigeria came second with 62 to place Mauritius in No. 3 position.
Access to foreign exchange
Again, the former apartheid country maintained the first position with 80, Egypt came second with 79 while Rwanda came third with 61.
We’re not surprised why Nigeria came last on access to foreign exchange due to the recent foreign exchange crisis in the country.
In fact, a few days ago, foreign airlines in Nigeria complained that they were unable to repatriate their revenue back to their headquarters because the Central Bank of Nigeria’s regulatory policies
At the time of this report, the official exchange rate of USD to Naira (NGN) was NGN413/$1 while it’s NGN575/$1 at the black market.
Market Transparency, tax, and regulatory environment
This is Nigeria’s comparative advantage in the ABSA Index 2021 as the most populous African country rakes in 86 points to throw South Africa to the second position (84) while Mauritius occupied the third position with 83.
While this is commendable, we believe that much still needs to be done. Civil society organisations need to put more pressure on the government to be more transparent in its policies.
Every foreign investor is more comfortable doing business in an open environment.
Capacity of local investors
Namibia came first with 100 points to place S/A in second position (77), Mauritius scored 68 while Nigeria occupied the fifth position (44).
Egypt, South Africa, and Botswana had 82, 77, and 76 respectively while Nigeria had 69 (5th)
Enforceability Of Financial Contracts
Ghana, Nigeria, and South Africa got the maximum points (100) while Angola, Lesotho, and Cameroon top the bottom of the table.
The Absa 2021index noted that Malawi, Egypt, and Uganda are among the countries that improved their ranking the most.
The economic framework and policies put in place by the government are strong indicators in foreign investment.