South Africa is the most open and potentially lucrative country on the continent for U.K. companies looking to expand their businesses, according to the first edition of the Barclays Africa Trade Index.
Of 31 sub-Saharan countries, South Africa ranked second in terms of abundance of opportunities after Nigeria and first for openness and ties to other African states, according to the index, commissioned by London-based bankBarclays Plc.
“While South Africa is the standout performer in the overall index, Nigeria arguably represents the most exciting long-term opportunity for U.K. businesses,” Barclays said in the report published Thursday. “However, its performance in terms of openness, 12th, and intra-African connectivity, 16th, means that Nigeria still has a long way to go before it can hope to compete with South Africa as a regional trade hub or as a gateway to other African markets.”
Growth inSouth Africa, the continent’s most developed economy, has slowed amid power blackouts and rising interest rates and inflation. Nigeria’s economy, hurt by the slump in the oil price, is still forecast to expand 4.8 percent this year by theInternational Monetary Fund, against 1.2 percent for South Africa.
“The trader and investor appetite for engagement with sub-Saharan Africa has picked up considerably in recent years,” Barclays said, adding that the U.K. exported about 8.2 billion pounds ($12.5 billion) of goods to sub-Saharan countries in 2013 and exports increased 6 percent annually since 2004. “The most populous states are the most prominent in terms of trade opportunity in the Barclays Africa Trade Index and their future prospects on the whole suggest rising incomes, an expanding middle class and much larger and more sophisticated consumer markets.”
Nigeria, Ethiopia, the Democratic Republic of Congo, South Africa and Tanzania all rank in the top six performing countries on trade opportunity, while Ethiopia, Congo, Tanzania and Nigeria, together with Ghana and Mozambique, lead in average economic growth over the past five years, Barclays said.
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