- According to the 2020 Africa Risk and Reward Index, the investment climate and risk landscape in all East African countries has declined in the past year.
- The rising political tensions ahead of elections in Ethiopia, corruption in Kenya, and challenging regulatory environment for foreign investors in Tanzania were cited as the main factors contributing to these countries’ risk scores.
According to the 2020 Africa Risk and Reward Index, co-authored by the NKC African Economics research firm based in South Africa and the consultancy firm Control Risks, the investment climate and risk landscape in all east African countries have declined in the past year. The scores of Ethiopia, Kenya, Rwanda, Sudan, Tanzania and Uganda have gone down due to economic and political risks, which were intensified by the outbreak of Covid-19 early in the year. Prior to Covid-19, East African countries recorded the highest levels of economic growth in sub-Saharan Africa. The rising political tensions ahead of elections in Ethiopia, corruption in Kenya, and challenging regulatory environment for foreign investors in Tanzania were cited as the main factors contributing to these countries’ risk scores.
Twenty-six countries in Africa were surveyed in terms of political stability, credit rates, and the investment environment in this year’s index. The Index gives an insight into the investment environment and risk landscape in major African markets, and provides a snapshot of opportunities and risks for investors. Vincent Rouget, the lead analyst at Control Risks, explained that the scores have gone down for most of the countries in Africa because of Covid-19, with a large part of the continent heading to go into a recession. Africa’s GDP is expected to contract by six to 10 percent this year. Though the contraction in growth is a global phenomenon, the impact on Africa is likely to be more severe due to its limited ability to support a long-term response.
Nevertheless, the Index pointed out that Covid-19 has triggered large scale digitalisation of African economies that have seen a total investment of $2 billion in Kenya, Nigeria, South Africa, Egypt, Ghana and Mauritius.
