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Business in Africa

The 12 countries your business should be heading to in Africa

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Probably the most rigorous economic rankings of the continent's countries you'll come across.

Twenty years ago, mainly oil extracting conglomerates andother commodity hunters sailed for Africa, and they packed plenty lifeboats. Then came events in a flurry and suddenly - well, not quite; “steadily” might be a better word - the “dark” continent didn’t look so dark after all. For the past 15 years at least, Africa has outpaced the developed countries in economic growth rates. In the past 10 or so, those rates have been accompanied by a growing awareness within Africa that their continent must embrace better and sturdier institutional frameworks, for their own good. The result has been a solid march towards policies and practices that would only have been remotely glanced at, twenty years ago. True, there remain big impediments but, nevertheless, this looks to be the continent’s time. And more and more international businesses are warming to that theme.

Tick, tock, said the clock

“Tick, tock, said the clock”

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Since 2000, Africa has been growing at least twice as fast as the United States and the countries of the European Union. That trend doesn’t look like stopping soon. The thirsty virgin territory that telecommunications investors have exposed has caught the eye of other industry sectors and there is a recognition now that, in spite of the poverty levels that attend the continent, there exist thriving middle class markets with ample consumer power. However, even though foreign investment has multiplied impressively over the recent decade, investment per person of population still indicates that there remain huge gaps to be serviced; and there is already a race to fill them. Yet the task, many fear, isn’t for the fainthearted: “Where do we start?” is a question I often get, “There isn’t reliable information out of that continent”.

[Interactive chart: click on column arrows to sort.]
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Data, data, everywhere, yet not a drop to trust

“Data, data, everywhere, yet not a drop to trust”

Or so it seems. I have been following Africa’s economies closely for the past ten years and can confidently suggest that the quality of information out of the continent has been markedly improving. True, they are not at the levels of Europe or America, but there is enough information upon which to assess its countries and base sound business decisions. That is what this study has done: the Business in Africa (BiA) Index is a composite empirical evaluation of each country’s macroeconomic and business conditions. It involves more than one hundred thousand data points, fifteen years, ninety-six independent parameters and hundreds of mathematical and empirical analyses. This is quite possibly the most thorough comparative evaluation of the continent’s 54 countries currently available. To maintain accuracy and objectivity of the evaluations, I have not used data from national statistics offices (usually their Office of Statistics and Central Banks); instead I have restricted information to four multilateral agencies - the World Bank, IMF, United Nations Conference on Trade and Development (UNCTAD) and, for a much smaller sample, the African Development Bank (AfDB) - hoping in this way to avoid biases that might be expected from information collected by national agencies about themselves.

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One king to rule them all

“One king to rule them all”


My Business in Africa Index expresses the overall performance of each country relative to the rest of the continent. It has sub-Indices that express each country’s performance in ten major areas: general size, economic productivity, economic agility, government finances, self-reliance, depth of financial sector, investor confidence, purchasing power, infrastructure, and business friendliness. Together, they provide a holistic picture of what each country’s economic and business prospects are. The overall performance BiA Index expresses, in clear, objective and empirical terms, the robustness of each country’s economy relative to its 51 counterparts on the continent. All of Africa’s 54 economies are involved here, except South Sudan (too recent, it’s a new country) and Somalia (non-functioning state). All of them have been put through a rigorous wringer and explored upwards, downwards, sideways and edgeways: quite likely the most rigorous macro stress tests you will come across involving the continent.

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The criteria are 96 adjudged critical economic indicators, chosen from a collection of more than 400, spanning more than 20 years. The analyses, by their methods, have protected against country level internal positive or negative factors that might heavily distort the picture of country performance (for example, civil unrest during the period), systemic external positive or negative factors that might do similar (for example, the 80s debt crises, 00s world recession, etc.), and internal socio-economic factors that might pose significant but distorting advantages (for example, a particular country’s lucrative natural resources that might mask internal structural inefficiencies). Also importantly, rather than a snapshot of the countries’ positions at a particular year or point in time, the countries are assessed across the preceding five years every time.

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Whoops, there it is!

“Whoops, there it is!”

The resulting top 6 economies for 2016 are: Nigeria, The Seychelles, Algeria, Mauritius, Botswana and Gabon; followed by a next 6 of South Africa, Liberia, Ethiopia, Mozambique, Morocco and Zambia. All have been assessed based on their performance during 2010 to 2014. Nigeria on top isn’t surprising; it lends credence to what is by now - surely - one of the most labored clichés in international socio-economy: sort out Nigeria’s corruption and inefficiency problems and that country will soar. South Africa is in 7th place mostly because of its poor performance in Productivity, Agility (particularly its currency’s volatility) and the state of its Government Finances.

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Liberia beats 44 other countries, admittedly thanks to essentially starting from zero and so, no place to go to but up; yet you have to admire the sound work of economy management that its leaders have carried out, because things could just as easily have gone the other way. In the Investor Confidence category, Liberia bested all the other 51 countries, Mozambique was second. The Seychelles were better than every other in Productivity, while of the overall Top 12, Gabon’s Government Finances were in the best shape, even though The Republic of Congo and Comoros were ahead of it in first and second place in that category. The bottom 12 overall were Malawi, Burundi, Comoros, Democratic Republic of Congo, Chad, Guinea, Guinea-Bissau, Zimbabwe, The Gambia, Eritrea, Central African Republic, and Djibouti.■

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