Kenya Ranked 5th as Investment-friendly Environment in Africa

The Africa Risk-Reward Index which ranked 26 African countries based on investment potential awarded Kenya 6.27 points out of 10 earning it the fifth position out of the total.

Ethiopia tops the rewards sub-index, with eight points, followed by Egypt (6.7), Ivory Coast (6.6) and Tanzania (6.3). Ethiopia’s high reward score is attributed, largely, to its huge market of 100 million people, and also the process of liberalizing various sectors such as telecommunications, aviation and financial services.

The Africa Risk-Reward Index is made up of two strongholds which include rewards and risks. The rewards are tested on four precise bases including economic growth forecasts economic size, structure and demographics.

Among them all, economic growth outlook carries the heaviest weight in the reward score, as this is a major factor influencing any investment opportunities.

Kenya’s splendid performance is linked to the efforts to take full advantage of opportunities granted by the East African Community (EAC) by pushing for the removal of tariff and non-tariff barriers to trade, as well as pitching for free movement within the region, which was announced by the President, Uhuru Kenyatta, while addressing the 42nd General Council of the Organization of African Trade Union Unity (Oatuu)

On the downside, Kenya is ranked as the 16th most risky place to invest in whereas the Democratic Republic of Congo (DRC) takes the lead in that sect with an eight out of 10 score.In contrast, Mauritius is regarded as the safest.

In the East African Community, Kenya comes in second after Tanzania. This is because, Tanzania performs better than Kenya when it comes to political stability.

“Unlike Kenya, where ethno-regional tensions produce cyclical instability around elections, political stability risks in Tanzania are low in light of broader social cohesion under the ruling Chama Cha Mapinduzi party,” says the report.

The challenges that Tanzania bares are her protectionist attitude towards her neighbors, highlighting occasional blockages of goods from other EAC countries, as well as President John Magufuli’s nationalist stances on the extractives sector.

Kenya came third in the EAC after Tanzania and Uganda. Rwanda has been ranked to have the least risk in the region. According to the World Bank, it has been hailed for improvements in government bureaucracy and reforms that encourage international investment. It is also the highest-ranked country in the bloc on ease of doing business.

Nigeria, Morocco, South Africa, Algeria and Angola are some of the countries that were outdone by Kenya despite being perceived as countries with larger economies by the 2018 Gross Domestic Product value data from World Bank.