Congo, Kenya riskiest investment destinations, says report
Skyline of Nairobi City in Kenya. Kenya's reward score fell by 0.08 to 5.25 in September 2024, while its risk score rose 0.26 to 6.06. The overall risk-reward score fell by 0.34.
The Democratic Republic of Congo (DRC) and Kenya are the riskiest investment destinations in East Africa, largely blamed on political, social and economic threats.
The latest edition of the Africa Risk-Reward Index 2024, a country risk ranking by Control Risks and Oxford Economics Africa released on October 30 gives Congo a risk score of 7.6 out of 10 in the period ended September 30, 2024, followed by Kenya (6.06), Uganda (6.01) and Tanzania (5.37).
Rwanda stands out as the safest investment destination in the region, with a risk score of 5.11.
The scores for each country stem from the economic and political risks assessed on a scale of 1 to 10, with 10 representing the highest level of risk.
On the other hand, the reward scores are evaluated on a scale of 1 to 10, with 10 representing the highest level of reward.
The reward score takes into consideration the medium-term economic growth forecast for the country, its economic size, economic structure and demographics, with the economic growth outlook being given the biggest weight in the reward score owing to the fact that investment opportunities increase where economic growth is strong.
According to the report, Kenya’s reward score deteriorated by 0.08 to 5.25 in September 2024, from 5.33 in September 2023, while its risk score deteriorated by 0.26 to 6.06 from 5.8 in the same period, resulting in a decline in the overall risk-reward score by 0.34.
DRC’s reward score also worsened by 0.23 to 5.65 from 5.88 while risk score deteriorated by 0.07 to 7.6 from 7.53, leading in an overall decline in the risk-reward score by 0.3.
In August, global rating agency S&P Global downgraded Kenya’s credit rating, citing withdrawal of the controversial Finance Bill 2024. This was the third rating agency to lower the country’s credit worthiness after Fitch and Moody’s investor Service taking take a dim view of the country’s revenue forecast amid rising debt burden.
Mauritius emerged as the safest investment destination in Africa, with a risk score of 3.22, followed by Botswana (3.44), Namibia (4) and Morocco (4.01) while Zimbabwe was the riskiest country, with risk score a risk score of 7.79, followed by Ethiopia (7.7) and Nigeria (7.66).
According to the report, anti-government sentiment has persisted in Kenya following the anti-Finance Bill 2024 protests in June which culminated in the withdrawal of the proposed tax law and the inclusion of the opposition in Cabinet appointments by President William Ruto.
“The government’s tax push was viewed as a betrayal of Ruto’s election pledge to improve the lives of ordinary citizens, high inflation and a weakening currency had in fact had the opposite effect. It is unlikely that Ruto will fully abandon all the proposed tax measures that have brought Kenya to a policy standstill, but his next budget will tread softly on tax increases for essential commodities that could impact households,” the report says.
In DRC, a resurgence of violence in the eastern part is worsening the dire humanitarian emergency, forcing millions to flee their homes to overcrowded camps where access to basic needs is severely limited as needs skyrocket.
The Congolese army and its allies are fighting the M23, which has been progressively taking over territory eastern DRC since 2022.
