By our staff reporter
Ethiopia remains one of the most challenging countries to conduct business in Africa, but it also holds a favorable position in terms of potential rewards, according to the joint report by Oxford Economics Africa and Control Risks titled ‘The Africa Risk-Reward Index 2023,’ which marks the second consecutive year where Ethiopia ranks among the highest-risk countries for investment.
The report reveals that, following Nigeria and Zimbabwe, Ethiopia presents risks for potential investments. However, there has been a slight improvement in Ethiopia’s risk rating compared to the 2022 Africa Risk-Reward Index. In the 2022 report, Ethiopia received a risk score of 7.65 out of 10, which has marginally decreased to 7.64 for 2023.
This year’s report shows Nigeria and Zimbabwe at the top of the risk ranking, both with a score of 7.65, compared to 7.25 and 7.56 in the previous year’s report, respectively.
In terms of rewards, Ethiopia has secured the leading position for the second consecutive year. This year, the country received a score of 6.58 out of 10, an increase from last year’s score of 6.5. Côte d’Ivoire, Uganda, Nigeria, Senegal, and Egypt followed Ethiopia with scores of 5.77, 5.53, 5.5, 5.41, and 5.38, respectively.
The Africa Risk-Reward Index combines risk and reward scores, integrating economic and political risk analysis from Control Risks and Oxford Economics Africa. Risk scores are derived from the Economic and Political Risk Evaluator (EPRE), a joint subscription platform of Control Risks and Oxford Economics Africa. Analysts from both organizations assess various political and economic risk factors and assign them weighted ratings based on their significance and potential impact on business.
Reward scores incorporate medium-term economic growth forecasts, economic size, economic structure, and demographics. Economic growth outlook carries the most weight in the reward score, as investment opportunities thrive in economies with robust growth. Additionally, the size of the economy is also considered in the assessment.
Oxford Economics Africa, based in South Africa, specializes in macroeconomic research on the African continent since 2003. Control Risks, with over 40 years of experience in Africa, is a specialized risk consultancy that helps organizations establish secure, compliant, and resilient operations.
The eighth edition of the Africa Risk-Reward Index offers insights into the evolving investment landscape in major African markets and provides a comprehensive outlook on key trends shaping investment in these economies. It presents a comparative snapshot of market opportunities and risks across the continent, enabling organizations to develop informed strategies for business growth or investment in Africa.
