South Africa still ranks as the most attractive economy for investments destined for the continent despite challenges emanating from slow growth, a gloomy ratings outlook and waning perceptions, EY said in an index released Wednesday.<\/p>\n
The auditing and advisory company has also predicted a tough few years ahead for the continent. The global economy is struggling for growth amid slowing down commodity prices and a less rosy outlook for China\u2019s economic transformation and growth outlook.<\/p>\n
EY ranks South Africa, the region\u2019s most industrialised and second largest economy, as the most attractive investment destination in Africa in its Africa Attractiveness Index. Morocco, Egypt, Kenya and Mauritius are ranked second, third, fourth and fifth respectively.<\/p>\n
\u201cDespite macroeconomic challenges (and a low-growth environment), South Africa still outperforms most other African economies due to relatively high scores across every other dimension (partly a reflection of the fact that the South African economy is more developed than any other African economy),\u201d EY said.<\/p>\n
A weaker rand currency has also hobbled South Africa, although this is a problem that is shared with most regional peers such as the Malawi kwacha and Nigerian naira.<\/p>\n
Economic growth in SA is likely to be 0.6% this year, according to the IMF, although South Africa Reserve Bank governor Lesteja Kganyago was quoted on Wednesday by the Financial Times as saying \u201cgreen shoots\u201d of recovery are beginning to appear.<\/p>\n
Botswana is ranked seventh while Nigeria \u2013 Africa\u2019s largest economy \u2013 is ranked fifth. SA\u2019s neighbours, Zambia and Mozambique are ranked 17th and 20th while Botswana is ranked in seventh position.<\/p>\n
EY explained that Nigeria\u2019s relative under-performance on the Africa Attractiveness Index was as a result of lower scores on the business enablement, governance and human development pillars which reflected in its overall ranking.<\/p>\n
Experts say economic growth across Africa will likely remain slower in the next few years than it has been over the past 10 to 15 years. The International Monetary Fund\u2019s (IMF) baseline projection for 2016 has now been revised downwards to 3%.<\/p>\n
\u201cFrom an investment perspective, the next few years may be challenging \u2013 this is not because the opportunities are no longer there, but rather because these opportunities are likely to be more uneven than they have been.<\/p>\n
\u201cIt is now more important than ever for organisations and investors, who sometimes place too great an emphasis on shorter term economic growth trends, to adopt a granular, fact-based approach to assessing investment and business opportunities for the long-term,\u201d said Sugan Palanee, Africa markets leader at EY.<\/p>\n
The EY Attractiveness Index aids in measuring \u201clikely resilience in the face of current macroeconomic pressures, as well as progress being made (by governments) in critical areas of longer-term development, namely governance, diversification, infrastructure, business enablement and human development”.<\/p>\n
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