By Alex C
Nigeria, Africa’s biggest economy with rebased Gross Domestic Product (GDP) of $510 billion has been listed at the top African nation providing the best investment opportunities for retailers, a ranking index report by African-focused Rand Merchant Bank (RMB) revealed.
Nigeria dwarfs leading economies such as Egypt, Ethiopia, Democratic Republic of Congo and Libya who came second, third, fourth and fifth respectively on the RMB retail index. Africa’s second largest economy, South Africa, was ranked 15th, though RMB says the country remained the most attractive destination for overall investment.
RMB, the investment banking unit of FirstRand, said the list was compiled using urbanisation rates, population size and growth areas as well as each country’s gross domestic product per capita.
Nema Ramkhelawan-Bhana, an analyst with RMB said the factors used as criteria are probably “the most favourable prospects for retail investors” but cautioned that there could be changes as income dynamics change.
In March, the investment bank had listed Nigeria as the second top investment destinations in Africa, with the West African country slotted between South Africa – top of the pile – and Egypt, the third most lucrative investment destination.
With a population of about 170 million people, Nigeria holds the most robust consumer market on the continent. It is also on its way to becoming one of the world’s top 20 economies by 2030. RMB predicts that disposable income rate in Africa will grow at an average 5.5 percent yearly up till 2030, with the continent’s highest-performing cities boasting a combined purchasing power of $1.3 trillion, up from the present $750 billion.
Africa strategist for RMB, Celeste Fauconnie noted that although population trends remain a key investment for retailers; large-scale urbanisation generate social problems and unemployment which pose a strong risk to doing business within the continent.
Infrastructural gap, political instability, poor investments in education, weak institutions and vulnerability to changes in commodity prices were other risks identified as key challenges faced by investors.