Control Risks Group Holdings Ltd
Source: Control Risks Group Holdings Ltd |

Africa’s economic giants face increasing competition from upcoming Kenya and Ethiopia

New Africa Risk-Reward Index provides investors with a synthesis of risks and opportunities across the African continent

Ethiopia outperforms every African peer with its high reward score of 8.0

JOHANNESBURG, South Africa, September 15, 2017/APO/ --

Africa’s economic giants, Nigeria, South Africa and Egypt, have been stumbling recently. Rising security risks and political instability in Egypt, economic downturn and militancy in Nigeria and escalating political risks in South Africa led to doubts whether the balance between risks and opportunities in these markets is still favourable for businesses. Despite recent recovery in Nigeria and South Africa, Kenya and Ethiopia might soon outshine these heavy-hitters in the competition for investment, according to the newly released Africa Risk-Reward Index developed by Control Risks ( and Oxford Economics.

Key findings of the report:

  • Nigeria and its energy sector are too big to lose their appeal – the country’s reward score is 6.0 (out of 10), ahead of South Africa and Egypt. Nigeria’s charms, however, fade against a risk score of 7.3 (out of 10), as President Muhammadu Buhari’s government struggles through its first term. A fall in oil prices and lower production due to insurgent attacks in the Niger Delta have slashed growth from 6.3% in 2014 to 2.7% in 2015 followed by a sharp contraction of 1.6% last year. Economic indicators for this year are more favourable, but still the report forecasts a real GDP growth of only 1.1% in 2017.
  • South Africa’s risk score of 5.0 remains below the region’s average, but the reward score of 4.6 is also low. Whilst the country enjoys a deserved reputation as Africa’s pre-eminent constitutional democracy, several of its key institutions have gradually weakened over the past decade. Economic prospects are closely linked to the outcomes of the ANC’s national conference in December. The forecasted real GDP growth of 0.5% for 2017 is below population growth and certainly insufficient to reduce South Africa’s staggering 27.7% unemployment rate.
  • Egypt will test the most ardent optimist. President Abdul Fatah al-Sisi’s political position is stable, despite a series of economic and security challenges, reflected in the country’s risk score of 6.0. Socio-economic grievances, a government crackdown on opposition and Islamist groups and persistent militancy will continue to have an impact on the business environment. The tourism sector remains depressed. The country’s reward score of 5.5 reflects the measures the government has taken since mid-2016 to address its fiscal problems. Real GDP growth is expected to slow in 2017 (to 3.8%, from 4.3% in 2016) owing to a slowdown in government and private consumption.
  • Ethiopia outperforms every African peer with its high reward score of 8.0. Notably, it attracted $3.2bn of foreign direct investment in 2016 – more even than Nigeria, and double the figure for Morocco. The East African nation is one of Africa’s fastest growing economies and continues to offer strong prospects. Growth averaged 10% from 2010 to 2015 and although 2016 growth was slower at 6.5% the expansion remains impressive. However, the omnipresent role of government in the economy raises concerns relating to public sector efficiency and financial management. External debt is expected to increase to 38.7% of GDP by the end of this year, leading to a risk score of 5.8.
  • Kenya has achieved a period of strong GDP growth amid relative political stability: real GDP growth averaged at 6.0% in 2010-16. The 2017 growth forecast is at 5.4%. The country’s reward score is 6.7. A well-educated workforce and an innovative service sector, the government’s continued investments in upgrading critical national infrastructure, and deepening integration with its neighbours through the East African Community (EAC) all allow the country to act as a gateway into the larger East Africa region. Current fiscal concerns and a political system that remains closely tied to ethnic affiliation contribute to a risk score of 5.6 and reflects considerable room for improvements.

Paul Gabriel, Senior Analyst for Africa at Control Risks and lead-author of the report comments:

“Experienced investors – not only in Africa, but around the world – know that risk and reward are close companions. While no serious investor should overlook the economic giants of the continent, real competitive edge can only be achieved when investors manage to stay ahead of the pack in knowing what’s next. The Africa Risk-Reward Index helps investors to identify some of the more hidden investment opportunities in times where the heavy-hitters are struggling.”

Distributed by APO Group on behalf of Control Risks Group Holdings Ltd.

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About Control Risks:
Control Risks ( is a global risk consultancy. We help some of the most influential organisations in the world to understand and manage the risks and opportunities of operating around the globe, particularly in complex and hostile markets. Our unique combination of services, our geographical reach and the trust our clients place in us ensure we can help them to effectively solve their problems and realise new opportunities in a dynamic and volatile world. Working across five continents and with 36 offices worldwide, we provide a broad range of services to help our clients to be successful.

About Oxford Economics:
Oxford Economics is a world leader in global forecasting and quantitative data analysis, acting as a key adviser to corporate, financial and government decision-makers, and thought leaders. Our worldwide client base comprises of international organisations, including leading multinational companies and financial institutions; key government bodies and trade associations; and top universities, consultancies and think tanks. Oxford Economics has a global team of over 200 professional economists and econometricians situated in 20 offices around the world that help clients quantify global impacts and analyse shifts in the macroeconomic environment to assess the effect on their business and organizations.

Control Risks and Oxford Economics:
Control Risks and Oxford Economics have joined forces to provide an innovative political and economic risk forecasting service that takes a holistic view of risk in a complex, rapidly changing, globalised world. Control Risks and Oxford Economics combine extensive geopolitical, operational and security expertise with rigorous economic forecasts and models on 200 countries and 100 industries. Together, we offer full-spectrum consulting that enables your organisation to navigate the world of political and economic risk. Covering all aspects of the investment journey, including security and integrity risk, our joint consultancy practice can overlay geopolitical and economic scenarios to bring new insights and direction.

The Africa Risk-Reward Index is defined by the combination of risk and reward scores, integrating economic and political risk analysis by Control Risks and NKC African Economics (an Oxford Economics company).

Risk Scores
The risk scores replicate the scoring of each country within the joint product offering Economic and Political Risk Evaluator (EPRE) of Control Risks and Oxford Economics, the majority shareholder of NKC African Economics. Control Risks and Oxford Economics analysts rate a series of political and economic risk factors on a scale from 1 to 10, with 10 representing the highest level of risk. Each political and economic rating is assigned a default weight, based on its significance in the country context and its potential impact on business. The individual political and economic risk variables are then combined – multiplying rating by weighting – into the overall risk rating of a country.

Reward Scores
The reward scores incorporate medium-term economic growth forecasts, economic size, economic structure and demographics. The economic growth outlook has the biggest weight in the reward score, as investment opportunities multiply where economic growth is strong. But the absolute size of the economy makes a difference, too, so the score incorporates a weight for economy size.The economic structure indicator derives from the ‘economic structure risk’ component of NKC’s sovereign risk rating model, which takes into account debt metrics, the current account, financial structure (including banking sector stability) and investment. Demographics are incorporated through the formulation of a demographic dividend, which incorporates population size, urbanisation and dependency ratios.

For details on the individual risk and reward definitions, please contact us at: or