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A new index, ranking each of Africa's 53 countries in terms of investment potential, launches today. The Star of Africa(TM) is a weighted index based on governance and social capital as well as Africa's electricity, water (supply, sanitation and irrigation), internet and telecommunications sectors.1
The index is launched by African Rainbow Consulting, which provides intelligence briefings on doing business in Africa. It is designed to help investors and entrepreneurs to establish which countries offer significant risk or opportunity for successful long-term investment.
Topping the index is Nigeria, which, despite its poor governance score, offers significant scope for improvement in access to water, electricity and ITC infrastructure. Ethiopia ranks second, based on its potential for better countrywide access to water and electricity.
Somalia, Eritrea and Chad provide the least attractive investment opportunities due primarily to low scores on the governance and social capital scales.
Katharine Pulvermacher, Chief Executive, African Rainbow Consulting, comments: "Africa represents a market of a billion people. Eighty per cent of Africans live in rural areas, many without access to what most of us consider basic amenities. Significant and highly profitable business opportunities exist in the continent. If these are maximised, the result will be improved African living standards and a boost to economic growth.
"But while many people in the west would like to contribute to development in Africa without giving aid, there is very little reliable information available to potential investors on where the opportunities lie and the risk involved. The Star of Africa(TM) is designed to address this."
Some of the major opportunities available include:- An estimated 497 million people need access to electricity.
- 47% of Africa's energy use is sourced from biomass, much of which is inefficient and environmentally destructive.
- 600 million potential customers are waiting for access to improved sanitation.
- Over 36 million hectares in Africa are suitable for irrigation, but are not actually irrigated.
- 628 million Africans do not have mobile telephone subscriptions.
- Only 6% of Africans use the Internet.
1Star of Africa(TM) Index explained:
The Star of Africa is based on five key indices:- Energy Index: calculates the potential market size in each country in terms of megawatt hours.
- Water Index: outlines potential for improving access to sanitation and clean water, weighted by population size.
- ITC Index: maps potential markets for mobile telephone and internet use, PC ownership, factoring in market competitiveness.
- Social Capital Index: yields insight into population's health (40%), education levels (40%) and demographics (20%)
- Governance Index: rescaled aggregate of World Governance Indicators, covering issues such as corruption, violence, rule of law and ease of doing business.
