Where to Invest in Africa 2017/2018

Podcast

It has been a relatively smooth ride for Africa in the six months since we launched the 2017/2018 edition of Where to Invest in Africa.

RMB is here to help you navigate the landscape and provide you with insights to guide you on your African journey.





Thato Kgatlhanye CEO of Rethaka, South Africa

Money talks: Going with the (currency) flow

Over the past three years, some African governments have had to implement deep and painful budget cuts, announce multiple currency devaluations and adopt hawkish monetary policy stances — all a result of a significant drop in traditional sources of revenue. There are some countries that have been more nimble and effective than others in managing shortfalls, but major policy dilemmas have forced governments to balance economically prudent solutions with what is politically palatable.

Unfortunately, there is no quick-fix solution to this problem, and traditional forms of revenue will remain a reality for many years to come. This year, we “follow” the money as we evaluate aspects that are integral to a country’s balance of payments (BOP) for the purposes of identifying each economy’s key income generators to allow for better risk management and to hone in on where the investment opportunities in Africa lie.




Balance of payments structure

Source: RMB Global Markets



The need for Africa to diversify its revenue sources is a hot topic, but this is a daunting and difficult task. Predictably, the avenues currently available are still traditional in nature, a scenario that will not be changing anytime soon.

We have therefore focused on the main sources of dollar revenues in Africa to allow for better risk management and highlight where investment opportunities lie. The five key avenues of inflows are:

1

Exports of goods and services

2

Foreign direct investment

3

Portfolio flows

4

Donor funding

5

Remittances

So, it’s back to basics for investing in Africa – especially after a stormy three years of low growth, faltering currencies, and twin deficits. Although opportunities in Africa remain abundant, the challenging business environment keeps some investors from either entering or expanding in these markets. It is now more important than ever for African governments to make meaningful improvements to their operating environments to enable increased investment based not only on commodity prices but also on the attractiveness of the business environment itself.

Thato Kgatlhanye CEO of Rethaka, South Africa
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