Ghana: EIU survey highlights Africa's investment potential

According to a recent survey of over 150 institutional investors by the Economist Intelligence Unit (EIU), more than half those polled believe that Africa is “the most attractive region to invest”. While Nigeria and Kenya are likely to offer the best investment returns during the next decade they are followed by Ghana, Zimbabwe and Egypt. Despite this interest, however, more than half of the institutional investors (including banks, pension and hedge funds) admitted that Africa made up less than one per cent of their total investment exposures.

What makes the poll interesting is that investors increasingly believe that African growth is not simply about commodities. The CEO of an Abu Dhabi government-owned investment fund, Invest AD Asset Management, stated that Africa has “real economic growth drivers”, and is no longer just a “destination for grants and aid” but now a “destination for trade and investment”. Nevertheless, investors still believe that commodities, natural resources, and energy are those sectors which are most likely to produce the highest returns with agriculture, agribusiness, construction, and banking and financial services also being attractive. The survey's respondents are, however, still wary of political difficulties, bribery and corruption.

It is interesting that most of the highlighted countries have had severe political problems in recent years although, in one case, it has perhaps set the stage for a brighter political future. As always the potential size of returns could lead investors to discount some of these risks. The actions of Boko Haram in Nigeria have, for example, so far had a modest effect on the “foundations” or economic fundamentals of investing in the country.

For more news and expert analysis about Ghana, please see Ghana Politics & Security.

© 2012 Menas Associates